Bubba Is a Shrimp Fisherman Who Used $2,000 from His

question 91

Multiple Choice

Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?

• A)$20
• B)$40
• C)$200
• D)$400

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Definitions:

Forwards

A contract between two parties to buy or sell an asset at a specified price on a future date.

Swaps

Agreements to exchange two securities or currencies.

Profiling An Option

This term is not widely recognized in standard financial terminology. NO.

Call Option

An option contract that allows the holder to purchase a specific asset at a predetermined price before the contract expires.