Question

A(n) _______ is when an owner takes his property off the market for a definite period of time in exchange for some consideration, but he grants the right to purchase the property within that period for a stated price.

Answer 1

Option

Step-by-step explanation:

Option refers to those contracts wherein a person gets the right but is under no obligation to buy a said property at price fixed today in future. And during the said period, the option seller cannot sell the property to anybody else.

Under such a contract, the buyer pays the seller a premium which is forfeited irrespective of whether on the future date, the buyer chooses to buy the property or not.

Options are a form of derivative contracts wherein the value of such options is derived from the value of the underlying asset. Here, the underlying asset is the property.