Topic 5 Flashcards
(7 cards)
1
Q
what does a call option on an equity give the holder?
A
the right but not the obligation to buy a share
2
Q
what is a counterparty risk?
A
a party on one side of the transaction fails to deliver
2
Q
what does a put option on an equity give the holder?
A
the right but not the obligation to sell a share
3
Q
what does exchange act as?
A
the counterparty to each transition, ensuring delivery/settlement
4
Q
what are options?
A
a type of derivative financial instrument
5
Q
what does the buyer/holder of an option has what?
A
the right but not the obligation to buy or sell another underlying security at a specified time in the future at a specified price
6
Q
A
