Binary Options

question 56

Multiple Choice

Binary options

• A)are based on two possible outcomes-yes or no.
• B)may make a payoff of a fixed amount if a specified event happens.
• C)may make a payoff of a fixed amount if a specified event does not happen.
• D)may make a payoff of a fixed amount if a specified event happens and are based on two possible outcomes-yes or no.
• E)All of the options

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Definitions:

Forward Contract

A personalized deal between two counterparties to execute the sale or purchase of an asset at a set price on a future date agreed upon.

Fair Value

An estimate of the market value of an asset or liability; it is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one country's currency is worth in another country's currency.

Two-Transaction Perspective

An approach in accounting that views a transaction involving foreign currencies as two separate events: one for the initial transaction and another for the currency exchange.