As a Security,options Are BEST Described by Which of the Following

question 5

Multiple Choice

As a security,options are BEST described by which of the following?

• A) They have a very long maturity.
• B) They can be a risky purchase for investors.
• C) They do not legally obligate the holder to buy or sell.
• D) They are not similar to futures contracts.

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Definitions:

IFRS 3

An International Financial Reporting Standard that deals with business combinations, requiring acquired assets and liabilities to be measured at their fair values at acquisition date.

Acquisition Method

An accounting technique used to consolidate the financial statements of two companies when one company acquires control of another.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Future Cash Flows

Projections of the money a business expects to receive and pay out over a future period, influencing decision-making and valuation.