The opportunity to buy stock at a fixed price over a specific period of time is referred to as:

• A. A callable bond
• B. A stock dividend
• C. A stock option
• D. A stock split

Answer: (C)

Verified step by step guidance

1. Understand the concept of a stock option: A stock option is a financial instrument that gives the holder the right, but not the obligation, to buy or sell stock at a predetermined price (known as the strike price) within a specific time frame.
2. Differentiate between the terms provided in the question: A callable bond is a type of bond that can be redeemed by the issuer before its maturity date. A stock dividend refers to the distribution of additional shares to shareholders instead of cash. A stock split involves dividing existing shares into multiple shares to increase liquidity.
3. Recognize that the opportunity to buy stock at a fixed price over a specific period aligns with the definition of a stock option.
4. Review the correct answer provided in the question: The correct answer is 'A stock option,' which matches the definition and characteristics described.
5. Ensure clarity by revisiting the definitions of the other terms to confirm they do not match the description of buying stock at a fixed price over a specific period.