Identify the False Statement Related to Break Forward Contracts

question 21

Multiple Choice

Identify the false statement related to break forward contracts.

• A)It is a combination of spot and derivative positions that replicates an ordinary call option.
• B)The initial positions are structured so that the overall position costs nothing up front.
• C)Penalizes the investor if the option ends up out-of-the-money.
• D)Break denotes the ability of the purchaser to void the contract.
• E)All of the above statements are true related to break forward contracts.

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