Which of the Following Is Not True Regarding Using an Option

question 46

Multiple Choice

Which of the following is not true regarding using an option to hedge financial risks versus a forward contract?

• A)​An option is a right to buy or sell an underlying, while a forward contract is an obligation.
• B)​An option requires an initial cash outlay, while a forward contract does not.
• C)​Both options and forwards are said to have asymmetric or one-sides return profiles.
• D)​All of the above are true.

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Definitions:

Epidermal Cells

Cells that make up the epidermis, the outermost layer of the skin, serving as a protective barrier against environmental elements.

Abrasion

A wound caused by superficial damage to the skin, no deeper than the epidermis.

Melanoma

A type of skin cancer that develops from melanocytes, characterized by the uncontrolled growth of pigment-producing cells.

Basal Cell Carcinoma

The most common type of skin cancer, originating in the basal cells that produce new skin cells.