A Key Difference Between an Option Contract and a Forward

question 91

True/False

A key difference between an option contract and a forward contract is that option contracts can be resold but forward contracts cannot.

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Definitions:

Analyzing

The process of examining data, documents, or systems in detail in order to understand them better and make informed decisions.

Discount Rate

The interest rate charged by central banks on loans to commercial banks or the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

IRR Cross-over

A concept where two projects have the same initial investment but differing cash flows leading to points at which their internal rates of return intersect.

NPV

Net Present Value is a financial metric that calculates the present value of all net cash flows (positive and negative) from an investment, discounted back at the investor's required rate of return.