If You Thought Prices of Share Would Be Rising Over

question 43

Multiple Choice

If you thought prices of share would be rising over the next few months you may wish to ________ on the share.

• A)purchase a call option
• B)purchase a put option
• C)sell a futures contract
• D)place a short sale order

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Definitions:

Present Value Interest Factors

A factor used to calculate the present value of a single future payment or a series of future payments, based on a specific interest rate and time period.

Guaranteed Residual Value

The predetermined value of a leased asset at the end of the lease term, often guaranteed by the lessee or a third party.

Maintenance Agreement

A contract between a service provider and a client for the ongoing maintenance and repair of equipment or property.

Implicit Lease Rate

The interest rate assumed in the lease contract that equates the present value of the lease payments and any unguaranteed residual value to the fair value of the asset.