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Basic Question 1 of 18
Which of the following instruments gives the owner the right to purchase securities directly from the firm at a fixed price for a specified time?
II. Call option
III. Put option
I. Warrant
II. Call option
III. Put option
User Contributed Comments 10
| User | Comment |
|---|---|
| LondonBoy | Why not I & II ? |
| niti | Question says directly from firm.Hence ans is I only. |
| danlan | That's the difference between Warrant and Call option: directly from firm/not. |
| mtcfa | Got it. |
| Rotigga | Caught me off guard. Good question. |
| cslau83 | Call could be direct from company when company writes call. |
| gulfa99 | "for a specified time" |
| Creep | Indeed, it's the "specified time" clause that is the kicker.... |
| jonan203 | "specified time" has nothing to do with it, call and put options have a limited life over a "specified time" as well; however, they are traded on exchanges, not by the company! |
| gill15 | Damn...nice catch--- some of these just get you... |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
contrast cash flow contingency provisions that benefit issuers and investors
CFA® 2025 Level I Curriculum, Volume 4, Module 2.