All of the Following Are True Regarding the Key Principles

question 63

Multiple Choice

All of the following are true regarding the key principles of forecasting except:

• A) Financial statement forecasts need not be comprehensive.
• B) Forecasts should not manifest wishful thinking.
• C) Financial statement forecasts must be internally consistent.
• D) Financial statement forecasts must rely on assumptions that have external validity.

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Definitions:

Expiration Date

In finance, this term often refers to the date on which a derivative contract, such as an option or futures contract, becomes void and ceases to trade.

Option Contract

A financial derivative contract that grants the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date.

Exercise Price

The price at which the holder of an option can buy or sell the underlying security.

European Calls

Options contracts that allow the buyer to purchase a stock or asset at a specific price on or before the expiration date, but only on that date.