An Option Contract: I.can Be Used to Hedge Risk

question 23

Multiple Choice

An option contract:
I.can be used to hedge risk.
II.can be used to speculate in the market.
III.can be based on a futures contract to create a futures option.
IV.cannot be based on a foreign currency.

• A)II and III only
• B)I and II only
• C)I, II, and III only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

Nominal Variables

Variables that represent categorial data which can be labeled or named but not logically ordered.

Frequency Bar Chart

A graphical representation displaying the frequency of various outcomes in a dataset. Each bar represents the frequency of each outcome or category.

Original Observations

The initial data collected or measured directly in an experiment or study before any manipulation, transformation, or analysis.

House Ownership

The legal right of an individual or group to possess, use, and control a dwelling or residence.