What Is an Advantage of Using Options Instead of Forward

question 16

Essay

What is an advantage of using options instead of forward contracts when speculating on exchange rates?

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Definitions:

Support Department Costs

Expenses incurred by service departments that assist other units of an organization, such as HR or IT, which do not directly contribute to revenue generation but are essential for operations.

Multiple Production Department Rates

Different overhead application rates used across various production departments to more accurately allocate costs.

Activity-Based Costing

A method of accounting that identifies and assigns costs to specific activities to better understand resource usage and profitability.

Janitorial Department Costs

Expenses associated with maintaining cleanliness and upkeep of a company's facilities, including wages for janitorial staff and cleaning supplies.