At the Beginning of March 2012, Brian Told Chris That

question 15

Multiple Choice

At the beginning of March 2012, Brian told Chris that he is thinking of buying some shares of Ford motors from him at the end of the month at $12/share. Chris agreed to this proposal and wrote a contract to sell shares to Brian at a price of $12/share. The current market price is $10/share. At the end of the month, the share price was $11/share, so Brian chose not to buy the shares from Chris. This is an example of:

• A) a forward contract.
• B) an option.
• C) a future contract.
• D) a swap.

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Definitions:

Implicit Knowledge

Knowledge that is acquired and applied without conscious awareness, often in the form of skills or learned behaviors.

Adapting Technologies

The process of modifying existing technologies or adopting new ones to better suit the changing needs and objectives of a business or society.

Certainty

The state of being completely confident or having no doubt about something.

Car Rental

A service industry that provides temporary vehicles for use by customers, typically on a short-term basis.