A Key Difference Between an Option Contract and a Forward

question 159

True/False

A key difference between an option contract and a forward contract is that the option price is determined at settlement while the forward price is determined when the contract is initiated.

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Definitions:

Lithosphere

The rigid outer layer of the Earth, consisting of the crust and the upper mantle.

Asthenosphere

The viscous, semi-fluid layer of the Earth's mantle located below the lithosphere, involved in plate tectonic movements and convection currents.

Less Rigid

Describing a structure or material that has a lower level of stiffness and resistance to deformation compared to more rigid counterparts.

Outer Core

The liquid layer of the Earth's core that lies beneath the mantle and surrounds the inner core, primarily composed of iron and nickel.