Uncertainty About the Future Market Value of an Asset Is

question 39

Multiple Choice

Uncertainty about the future market value of an asset is referred to as

• A) price risk.
• B) credit risk.
• C) interest rate risk.
• D) exchange rate risk.

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Definitions:

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock or other financial asset at a specified price within a specific time period.

Stock Price

The cost of purchasing one share of a company's stock in the market.

Exercise Price

The price at which an option holder can buy (call option) or sell (put option) the underlying asset.

Intrinsic Value

The actual, true value of a company or an asset based on underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.