A Contract to Keep an Offer Open for a Specified

question 40

True/False

A contract to keep an offer open for a specified time in return for a sum of money is referred to as an option.

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Definitions:

Tax Considerations

The factors concerning the tax implications of any financial decision, investment strategy, or transaction, which can affect the overall benefit or cost to an individual or business.

Risk Tolerance

An individual's or financial entity's capacity to endure loss or volatility in investment value while attempting to achieve investing goals.

Weighted Average Cost

A calculation that takes into account the various costs of goods based on their relative weights, to arrive at an average cost per unit.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits that could have been received but were sacrificed in the pursuit of another option.