The Assumption That Relates to the Entity Continuing in Business

question 20

Multiple Choice

The assumption that relates to the entity continuing in business for the foreseeable future is called _______.

• A)the entity assumption
• B)the going concern assumption
• C)the solvency assumption
• D)the liquidity assumption

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Definitions:

European Call

An option contract that allows the holder to buy the underlying asset at a specific price only on the expiration date.

American Option

A type of options contract that allows the holder to exercise the option at any time before and including its expiration date.

Expiration Date

The specified date on which an option, futures contract, or other derivative ceases to exist.

Right to Buy

An option giving the holder the ability to purchase an asset at a predetermined price within a specified timeframe.