Chartered Investment Manager (CIM) Practice Exam · Question
A Canadian investor sells an options contract, giving the buyer the right to purchase 100 shares of XYZ Corp. at $50.00 per share. This is an example of which type of option?
A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price (strike price) on or before a certain date.
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Question: A Canadian investor sells an options contract, giving the buyer the right to purchase 100 shares of XYZ Corp. at $50.00 per share. This is an example of which type of option?
Answer options:
- A put option. ✅ A call option.
- A warrant.
- A future contract.
Correct answer: A call option.
Explanation: A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price (strike price) on or before a certain date.
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