Forward contracts and options as hedging instruments differ as follows Group of answer choices Forward Contracts are uncertain, allowing some upside whereas options are certain in outcomes Both Forward Contracts and Options are certain in outcomes. Both Forward Contracts and Options are variable in outcomes. Forward Contracts provide certain outcomes whereas options are uncertain, allowing some upside.

Forward contracts and options as hedging instruments differ as follows Group of answer choices Forward Contracts are uncertain, allowing some upside whereas options are certain in outcomes Both Forward Contracts and Options are certain in outcomes. Both Forward Contracts and Options are variable in outcomes. Forward Contracts provide certain outcomes whereas options are uncertain, allowing some upside.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter8: Securities Law Considerations When Obtaining Venture Financing

Section: Chapter Questions

Problem 10DQ

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Similar questions

Options contracts are affected by a number of factors. What are those factors? Which is most AND least significant?
Payoff from entering into a forward contract does the buyer have more to gain going long than the seller has to lose going short, profits if the price of the underlying at expiration exceeds the forward price and/or gains from owning the underlying versus owning the forward contract are equivalent? Explain why one or more of the options above are correct. and why, if any of the remaining options are incorrect.
When is a forward contract preferred over an option contract ?
In conducting an incremental B/C analysis of this data:a. the DN alternative is not an optionb. the DN alternative is an optionc. there is not enough information given to know if DN is an option or notd. DN is an option only if the alternatives are mutually exclusive
A futures contract a. is not traded on an organized exchange and is customized to meet the needs of the parties. b. is not traded on an organized exchange and is subject to formal regulations which results in standardized contrasts. c. is traded on an organized exchange and is subject to formal regulations which results in standardized contrasts. d. is traded on an organized exchange and is customized to meet the needs of the parties.
The advantage of over-the-counter products such as swaps or forwards contracts,relative to exchange-traded products such as options or futures, is: * A. standardization B. regulation C. flexibility. D. all of the given answers
A long forward contract becomes more valuable as the price of the asset declines Group of answer choices. True False Give typing answer with explanation and conclusion
Explain what is meant by forward contracts and futures using examples. List the main advantages / disadvantages for their use.
One of the differences between a forwardand a futures contract is forward contracts are standardized in the size but futures contracts are tailored to the needs of the parties involved b) a futures contract holder can legitimately close the contract but forward contracts cant be cancelled c)there are physical exchanges for trading forward contracts whereas futures contracts are traded over the counter d)all of the above
When a customer is able to benefit from a good or service on its own or together with other readily available resources, the good or service is distinct. is a contract. is interdependent. uses variable consideration.
Which is a key difference a manager should note in choosing between forward and futures contracts?a. Exchange trading makes forward contracts more liquid.b. Futures contracts carry standardized terms, while forward contracts can be tailored to meet specific needs.c. Futures contracts have greater default risk than forward contracts.d. Forward contracts require initial margin deposits and daily marking to market, while futures do not.
What is the difference between a competitive bid and a negotiateddeal?