What Is the Advantage of an Options Hedge Over a Futures

question 118

Multiple Choice

What is the advantage of an options hedge over a futures hedge?

• A)The options hedge has lower credit risk exposure.
• B)The options hedge has lower transaction costs.
• C)The options hedge is marked to market less frequently.
• D)The options hedge offers the most downside risk protection.
• E)The options hedge offers the most upside gain potential.

Understand the processing flow and costing in multi-department manufacturing environments.

Apply process costing methods to complex manufacturing scenarios involving multiple types of costs and process stages.

Understand the direct method for allocating service department costs to operating departments.

Calculate allocated costs using the direct method.

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Definitions:

Positive Economics

A branch of economics that seeks to describe and explain economic phenomena, focusing on factual and objective analysis without prescribing policies.

Teenage Unemployment

The scenario where individuals, typically aged 13-19, are actively seeking but unable to find work.

Economic Model

A simplified representation of economic processes, often using mathematical formulas or graphs, to analyze behavior and predict outcomes.

Inductive Reasoning

A method of reasoning in which a conclusion is reached based on the observation of specific instances or patterns.