Which of the Following Is the Best Definition of Option

question 77

Multiple Choice

Which of the following is the best definition of option contract?

• A) Long-term financial risk arising from permanent changes in prices or other economic fundamentals.
• B) A legally binding agreement between two parties calling for the sale of an asset or product in the future at a price agreed upon today.
• C) A forward contract with the feature that gains and losses are realized each day rather than only on the settlement date.
• D) Reducing a firm's exposure to price or rate fluctuations.
• E) An agreement that gives the owner the right, but not the obligation, to buy or sell a specific asset at a specific price for a set period of time.

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Definitions:

Ego

Within the framework of psychoanalytic theory, it refers to the component of personality that acts as a mediator among the desires of the id, the superego, and the constraints of reality.

Id

In psychoanalytic theory, the part of the personality that is the source of instinctual impulses and demands for immediate satisfaction of primitive needs.

Psychosexual Stages

A theory by Sigmund Freud that describes the development of human personality and behavior in terms of a series of stages during childhood, each characterized by a specific erogenous zone and conflict.

Oral

The first stage of Freud's psychosexual development, where pleasure centers on activities involving the mouth.