Which Two of the Following Are Key Differences Between an Option

question 20

Multiple Choice

Which two of the following are key differences between an option contract and a forward contract?
I.option contracts can be resold but forward contracts cannot
II.the option price is determined at settlement while the forward price is determined when the contract is initiated
III.the rights and obligations of the buyer
IV.cost when contract initiated

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

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Definitions:

Recycle Gifts

The act of giving previously owned items as gifts, an environmentally friendly practice that reduces waste and promotes sustainability.

Efficiency

The degree to which resources are used optimally to produce goods and services, minimizing waste and maximizing output.

Market Price

The current price at which an asset or service can be bought or sold in the market.

Value Loss

The decrease in worth or utility of an asset or commodity, often due to changes in market demand, deterioration, or obsolescence.