A Bond Is

question 144

Multiple Choice

A bond is:

• A) essentially the same thing as a stock.
• B) a promise to pay back a certain amount at a certain time.
• C) considered to be an asset by the seller, since the buyer of the bond accepts a liability in receiving the funds for the sale of the bond.
• D) B and C are both correct.

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Definitions:

Hedge Price

A price locked in through hedge contracts to reduce exposure to price fluctuations of commodities, currencies, or securities.

Futures Contract

A formal, uniform agreement for purchasing or selling an item at a set price at a future date, commonly utilized for trading commodities or financial instruments.

Lumber

A term for timber after it has been processed into beams and planks, a stage in the process of wood production.

Option Payoff Profiles

Graphical representations showing the potential profit or loss of an option strategy at various underlying asset prices at expiration.