When Accounting for Forward Contracts,what Is Meant by the Term

question 25

Multiple Choice

When accounting for forward contracts,what is meant by the term "executory contract"?

• A)No cash changes hands.
• B)The CEO of the company is the only one authorized to engage in the contract.
• C)There must be a price paid for the option.
• D)The contract is not valid unless both parties sign it.

---

Definitions:

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain time period.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specific time frame.

Long Straddle

A long straddle strategy involves simultaneously buying a put and call option on the same asset with the same strike price and expiration date, benefiting from a strong move in either direction.

Stock Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy a stock at a specified price within a certain period.