What is an option? A contract that is derived from some other underlying quantity, index, asset A) or event. B) A contract that gives the holder the right to buy or sell something at a specified price. A contract that gives the holder the right to sell an instrument at a pre- specified price. O D) A contract that gives the holder the right to acquire an instrument at a pre- specified price.

Q: When I buy an option, I gain rights, but I also have obligations to the option seller. True Or…

A: Options are important financial derivatives widely used in financial markets.

Q: The price that the buyer of a call option pays for the underlying asset if she executes her option…

A: Call Option :— Call Option Which Gives the Holders the Right to Buy an Assets, But not an Obligation…

Q: Describe each of the following derivative instruments and suggest a specific risky situation that…

A: All of these derivatives instruments defined below.

Q: A call option holder has an obligation to sell the asset. True or false?

A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…

Q: one key difference between option contracts aND FUTURE CONTRACTS IS THAT IN AN OPTION CONTRACT, THE…

A: Option Contract-An options contract is a contract between two parties to facilitate a potential…

Q: What is a purchase option? How does it affect accounting for a lease?

A: Purchase option : A purchase option is an agreement that gives the lessee a choice to purchase the…

Q: Describe the effect of a “bargain-purchase option” onaccounting for a capital lease transaction by a…

A:

Q: Describe how a "bargain buy option" affects the lessee's accounting for a finance lease deal.

A: HERE IS THE ANSWER:

Q: reverse repurchase agreement (Repo) a) A contract to sell a security or precious metals at a…

A: Reverse Repurchase agreements are very common in derivative market to prevents the losses.

Q: In the derivative markets a swap is: *       A. another name for a call option.       B. another…

A: The swap refers to the exchange. In the financial derivatives market, swaps are used for…

Q: which are the terms and conditions for OPTION CONTRACT WITH SIMULTANEOUS TITLE CLOSING?

A: The option contract is an obligation to purchase the property in the future at a fixed predefined…

Q: The price that the buyer of a call option pays for the underlying asset if she executes her option…

A: Option: A financial instrument that is based on the value of underlying securities, such as stocks,…

Q: Which of the following is True? a. Call option and Put option are identical derivatives contracts…

A: If the buyer of a short call option exercises the right to buy the underlying asset from the seller…

Q: Define the terms, or give short explanations.               -short sale/short selling…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: Compare and contrast the commitments taken on by the following:   A futures contract seller versus a…

A: A futures contract seller is a party who has agreed to sell a particular asset at a particular…

Q: MCQ: The type of option that gives the right to buyer to sell the underlying option at spe price is…

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: Which type of financial derivative gives the holder the right t predetermined expiration date? )…

A: Options: An option is a contract that gives the holder the right but not the obligation to buy or…

Q: Complete the following: Purchasing a call option gives you A The right to buy an asset at the market…

A: Call options are common derivative contracts which have been explained below.

Q: With example, differentiate between a physical settlement and a cash settlement in the derivatives…

A: A derivative market is a financial market in which financial derivatives such as futures contracts,…

Q: Hedgers can enter into an insurance policy, also known as a financia contract, also known as a…

A: There are mainly three types of derivative contracts. They are – futures, options and swaps.

Q: what is the fair value option? explain how the use of fair value option reflect application of the…

A: Fair Value option is that the board has taken an additional step of giving companies the option to…

Q: CFD is a derivative contract. Yes or No

A: Contract for Difference are also called as CFDs.

Q: The seller of a put option is not necessarily the seller of the underlying asset. True False

A: The options can be sold even though the underlying assets are not held by the option sellers.

Q: A put gives the owner the right Select one: a. But not the obligation to sell an asset at a given…

A: This flexibility allows investors to protect their portfolios from potential downside risk (hedging)…

Q: Describe the effect on the lessee of a “bargain purchase option” on accounting for a finance lease…

A: Lease agreement refers to an agreement in which a contract is made to get the asset on lease. The…

Q: The seller of a forward contract:  Question 16Answer a. is obligated to take delivery and pays…

A: The objective of the question is to understand the obligations and rights of the seller in a forward…

Q: The following statements relate to derivatives. Which of the following is FALSE? a. Swaps may have…

A: Options are contingent claims, while swaps and future contract are forward commitments. This implies…

Q: Choose which sentance is false.       A. When you own a call​ option, you have the right to buy the…

A: The option contracts are the derivative financial instruments that can be classified as the call…

Q: The price specified on an option that the holder can buy or sell the underlying asset is called the

A: Strike price is the original price of the stock. It is the price specified on an option that the…

Q: The seller of a put option is not necessarily the seller of the underlying asset. Select one: O True…

A: Put options are vital financial derivatives which provide the right to sell the asset at the…

Q: a) Let VK(t, T) be the value of a forward contract on an asset with delivery price K, VK(t, T) =…

A: Forward contracts are agreements where one party agrees to buy a commodity at a particular price on…

Q: Debentures are frequently issued at amounts greater or less than face value. Discuss how the market…

A: The market rate of interest is the rate of interest that is currently being offered in the market…

Q: t contract is defined as: a. An agreement involving the exchange of an asset for cash at a fixed…

A: There are many types of contracts that are possible based on the payment term and settlement terms…

Q: if there are two parties, they make a future option contract on gold, and they plan to take physical…

A: Physical delivery are majorly have the convergence in the price, which are basically between the…

Q: Which of the following is true about forward contract expiration?  a.A deliverable forward contract…

A: On the date of expiration of a forward contract, settlement can be made on delivery basis or on cash…

Q: If spot price falls below the exercise price, seller of a futures contract makes a ______ while…

A: Futures . Futures are derivative that are entered to mitigate risk with regard to price movements.…

Q: A "cash and carry" transaction

A: Arbitrage is the strategy utilized by the investors, in which they make benefit of the asset…

Q: A critical characteristic of a derivative is that the instrument

A: A critical characteristic of a derivative is that the instrument: (B) derives its value from changes…

Q: Which of the following describes a short call option? O The obligation to buy an asset for a certain…

A: Concept. In options contract, The buyer of the call option has the right and not obligation to buy…

Q: In Swap contract one counter party has an obligation but not right, while in an option contract the…

A: Swap is a contract between two parties to exchange cash flows of a contract to each other. The leg…

Q: Which type of financial derivative is used to protect against adverse price movements in an asset?…

A: Financial derivatives are instruments whose value derives from the underlying assets or securities,…

Q: Explain the following concepts: (a) bargain purchase option and (b) bargain renewal option.

A: Lease agreement refers to an agreement in which a contract is made to get the asset on lease. The…

Q: A(n) is a contract for the use of an asset for a period of time without having to buy the asset. Oa.…

A: lease: lease is a contract  to buy the right to use the asset for particular period of time on…

Q: A seller of a futures contract can choose not to deliver the underlying asset. True O False

A: Future Contracts refers to a legal agreement or contract between the buyers or sellers to buy…