Which of the Following Is Correct

question 88

Multiple Choice

Which of the following is correct?

• A)The value (in dollars)of a call option on £5,000 with a strike price of $10,000 is equal to the value (in dollars)of a put option on $10,000 with a strike price of £5,000 only when the spot exchange rate is $2 = £1.
• B)The value (in dollars)of a call option on £5,000 with a strike price of $10,000 is equal to the value (in dollars)of a put option on $10,000 with a strike price of £5,000.

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Definitions:

Off-Balance Sheet Financing

Off-Balance Sheet Financing is a financial obligation that is not directly recorded on the company's balance sheet and is used to keep debt-to-equity ratios low and improve financial indicators.

Operating Expenses

Costs associated with a company's main operational activities, excluding cost of goods sold, financing costs, and taxes.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in the net income or loss for that period.

Lessee's Equity Cash Flows

This refers to the cash flows that a lessee obtains which directly affect their equity, usually through operations or transactions related to leased assets.