A Contract That Provides the Right,but Not the Obligation,to Buy

question 14

Multiple Choice

A contract that provides the right,but not the obligation,to buy or sell a given amount of currency at a fixed exchange rate on or before the maturity date is called an ______.

• A) Excise option
• B) Foreign currency option
• C) Foreign currency swap
• D) Hedge contract

Understand the relationship between marginal cost and R&D expenditures in firms.

Comprehend the role of government in financing basic scientific research and its implications on public goods and externalities.

Identify the optimal level of R&D expenditure for firms based on marginal cost and benefit analysis.

Grasp how successful product innovations increase consumer utility and spending efficiency.

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Definitions:

Financial Assets

Assets that derive value from a contractual claim, such as bank deposits, stocks, bonds, and derivatives.

Real Asset

Physical or tangible assets such as real estate, commodities, and natural resources that have intrinsic value.

Bonds

Fixed-income investments where an investor loans money to an entity (corporate or governmental) which borrows the funds for a defined period of time at a fixed interest rate.

Stocks

Shares of ownership in a company, representing a claim on the company's assets and profits.