Options on Futures Contracts Are Very Popular Because

question 13

Multiple Choice

Options on futures contracts are very popular because

• A) they require the holder to purchase at a future date.
• B) of their ability to create leverage.
• C) the seller of the futures contract is under no obligation.
• D) the amount of the underlying commodity is negotiable.
• E) none of the above.

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Definitions:

Infinite Projections

Speculative forecasts that extend indefinitely into the future, often used in theoretical models and not typically applicable in practical financial analysis.

Modified Accelerated Cost Recovery System (MACRS)

A method of depreciation used for tax purposes in the United States, allowing businesses to recover investments in certain property through deductions over a specified life.

Equipment

Tangible physical assets used in the operation of a business, such as machinery, computers, or tools.

Buildings

Structures that are constructed for residency, business, storage, or other purposes, recognized as fixed assets on a balance sheet.