By Using Options a Firm Can (At a Cost)protect Against

question 44

True/False

By using options a firm can (at a cost)protect against increases in raw material prices,while continuing to benefit from price decreases.

---

Definitions:

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses and costs associated with those activities.

Investor

An individual or entity that commits capital with the expectation of receiving financial returns, often through the purchase of stocks, bonds, or other investment vehicles.

Deferred Tax Liability

A tax obligation that a company owes but has not yet paid, arising from temporary differences between accounting and tax treatments of income and expenses.

Post-Acquisition

Refers to events, transactions, and changes in financial status that occur after one company acquires control of another company.