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.

---

Definitions:

Cost of Goods Manufactured

The total cost of producing goods during a specific period, including costs associated with materials, labor, and overhead.

Gross Profit

The financial measure calculated by subtracting the cost of goods sold from total sales revenue.

Work in Process Inventory

The total value of unfinished goods that are in the process of being manufactured at a given period.

Raw Materials Inventory

The stock of primary materials used in the manufacturing process before they are converted into finished goods.