Unlike the Forward Hedge,there Are Upfront Cash Flows Related to the Option

question 44

Multiple Choice

Unlike the forward hedge,there are upfront cash flows related to the option premium,which means that:

• A)the buyer or seller must pay a fee to buy or sell an option.
• B)dealing with options always results in some loss of money.
• C)money must be spent to buy the option or money is received on the sale of an option.
• D)option results in the elimination of cash flow variables.

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Definitions:

Net Income

The final amount a company earns, post all deductions for expenses and taxes from its overall revenue.

Total Dividend Payment

The sum of all dividends a company pays out to its shareholders over a specific period.

Stock Split

A stock split is a corporate action that increases the number of a company's shares by dividing each share, which can make the stock more affordable to investors.

Total Market Value

The combined market price or value of all of a company's outstanding shares, reflecting its overall market capitalization.