An Advantage of Using Options to Hedge Is That the MNC

question 13

True/False

An advantage of using options to hedge is that the MNC can let the option expire. However, a disadvantage of using options is that a premium must be paid for it.

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Definitions:

Solvolysis Reaction

A chemical reaction in which the solvent plays the role of one of the reactants, typically involving the cleavage of a bond and the addition of a solvent molecule.

Alkyl Chlorides

Organic compounds where a chlorine atom has replaced one hydrogen atom in an alkane, creating a haloalkane.

Rearrangement

A type of chemical reaction in which the structure of a molecule is rearranged to form a new molecule without the removal or addition of elements.

Methanol

A one-carbon alcohol, CH3OH, used as an industrial solvent, antifreeze, fuel, and as a precursor to other chemicals.