The Major Difference Between Options on Real Assets and Options

question 22

Multiple Choice

The major difference between options on real assets and options on financial assets is that options on:

• A)Financial assets are costly
• B)Financial assets have a higher probability of positive payoff
• C)Real assets are implicit, rather than explicit
• D)Real assets are not influenced by price volatility

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Definitions:

W-2

The form that an employer must send to an employee and the IRS at the end of the year, which reports the employee's annual wages and taxes withheld.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period of time, resulting in net profit or loss.

Tax Bracket

Where each line of the tax schedule has an increasing percent based on increasing income.

Taxable Income

Income subject to tax, after deductions and exemptions, according to the law.