Which of the Following Is an Advantage of Hedging with Options

question 108

Multiple Choice

Which of the following is an advantage of hedging with options instead of forward contracts?

• A) Options prices tend to be lower than forward prices.
• B) If the price moves in the opposite direction to the one hedged against, the hedger can decline to exercise the option and limit the loss to what was paid for the option.
• C) If the price moves in the direction of the one hedged against, the hedger can decline to exercise the option and limit the loss to what was paid for the option.
• D) Options allow investors to purchase a forward contract at a later date.

Apply Huckel's rule to determine the aromaticity of polycyclic compounds.

Understand the hybridization of nitrogen in heterocycles and the implication on lone pairs.

Name common allotropes of carbon and describe their structures.

Provide the structures of common heterocyclic compounds.

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Definitions:

Preceding August

Indicates a time period or events that occurred before the month of August.

Payment Stream

A series of payments made or received over time, usually as part of a financial agreement such as a mortgage or annuity.

Economically Equivalent

Having the same financial value when considering various factors like time, risk, and opportunity cost.

Invested Rate

The rate of return on an investment, reflecting the annual income earned on the investment expressed as a percentage of its original cost.