An Option Contract Can Be Used to Either Hedge Risk

question 244

True/False

An option contract can be used to either hedge risk or speculate in the market.

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Definitions:

Inventory

The collective sum of all products and materials possessed by a company intended for either resale or production purposes, encompassing raw materials, unfinished products, and completed items.

Ending Inventory

The cumulative worth of all stock, encompassing raw materials, items in the process of being made, and completed products that a company possesses at the conclusion of a financial period.

Specific Identification

A method for inventory valuation where each item in inventory is identified and tracked individually.

Inventory Accounting

Inventory accounting is the process of valuing and tracking physical stock and includes methods such as FIFO (First In, First Out) and LIFO (Last In, First Out).