Buying a Call Option (Standing Ready to Buy Bonds at the Exercise

question 37

True/False

Buying a call option (standing ready to buy bonds at the exercise price) is a strategy that an FI may take when bond prices rise and interest rates are expected to fall.

---

Definitions:

Strategic Planning

The process of defining a company's direction and making decisions on allocating resources to pursue this direction.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and profits without needing to increase its financial leverage.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without resorting to external financing.

Short Term Forecasting

The practice of predicting the near-future outcomes of various variables such as sales or market trends over a short period, usually less than one year.