Options Are Also Called Derivative Assets Because They Derive Their

question 28

True/False

Options are also called derivative assets because they derive their value solely from the price of another asset.

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Definitions:

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project, calculated by discounting future cash flows to their present value and subtracting the initial investment.

IRR

Internal Rate of Return; a metric used in capital budgeting to estimate the profitability of potential investments.

MIRR

Modified Internal Rate of Return, a measure used in capital budgeting to estimate the profitability of potential investments.

NPV

Net Present Value, a calculation used to determine the present value of an investment's cash inflows and outflows over time.