Option Is a Contract That Gives Its Holder the Right

question 20

True/False

option is a contract that gives its holder the right to buy or sell an asset at a predetermined price within a specified period of time.

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Definitions:

Interest Rate

The proportion, typically expressed as a percentage, at which interest is charged by lenders on loans or paid by banks on deposits.

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.