LEAPS Are a Special Type of Option

question 41

Multiple Choice

LEAPS are a special type of option

• A) that must be exercised within six months.
• B) that can only be exercised on the expiration date.
• C) that cannot be exercised for at least a year after it is is purchased.
• D) that may have an expiration date as long as three years.

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Definitions:

Terminal Value

The estimated value of a business or project at the end of a forecast period, used in financial modeling.

NPV

Net Present Value, a calculation used to assess the profitability of an investment by summing the present values of all cash inflows and outflows associated with it.

Discount Rate

The discount rate applied in the discounted cash flow method to calculate the current value of future cash flows.

Tax Rate

The rate at which a person or company is charged taxes by the state.