A Unilateral Contract Is Formed When the Party Receiving the Offer

question 7

True/False

A unilateral contract is formed when the party receiving the offer com-pletes the re-quested act or performance.

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Definitions:

T-bills

Treasury bills, short-term debt obligations issued by the government with a maturity of less than a year, considered risk-free.

Option

A financial derivative that gives the holder the right, but not the obligation, to buy or sell an asset at a set price within a specific period.

Firm Completion

A commitment to finish a project or deliver a product by a specified date.

Asymmetric Information

Assumes managers have more complete information than investors about a firm’s prospects—can have an important effect on capital structure.