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:

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded by consumers.

Number Of Consumers

The total count of individuals in the market willing to purchase a particular good or service.

Clone

In biotechnology, it refers to an organism, cell, or piece of genetic material that is genetically identical to the one from which it was derived; in computing, it describes a replica or copy of a product, software, or hardware.

Price Elasticity

The responsiveness of the quantity demanded of a good or service to a change in its price.