An Option Whose Exercise Price Is Equal to the Spot

question 23

Multiple Choice

An option whose exercise price is equal to the spot rate is said to be:

• A) in-the-money.
• B) at-the-money.
• C) out-of-the-money.
• D) on-the-spot.

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Definitions:

Net Working Capital

The gap between a firm's present assets and its current obligations, signalling its short-term economic condition.

Operating Activities

Business actions directly related to the production, selling, and delivery of a company's goods and services, reflected in its cash flow.

Cash Flow

The movement of funds into and out of a business or project, critical for maintaining operations and investment activities.

Operating Section

Part of a company's financial statement (specifically, the cash flow statement) that reports on the cash activities related to its primary operations, such as cash receipts and payments from goods and services.