Options Contracts Mainly Differ from Futures Contracts in That They

question 40

Multiple Choice

Options contracts mainly differ from futures contracts in that they:

• A) offer more flexibility
• B) represent an obligation, not a right
• C) are more liquid
• D) are traded over the counter (OTC) between two parties

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Definitions:

Option to Expand

The right, but not the obligation, to increase the size of an investment or project.

Net Present Value

A financial metric that calculates the present value of the net cash flow generated by a project, adjusting for the time value of money.

Project Analysis

The process of evaluating the viability, profitability, and risk of a project before committing resources to it.

Operating Cash Flow

A measure of the cash generated or used by a company in its business operations, reflecting the entity's financial health.