FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Select all of the following statements that accurately compare or contrast forwards and options:
Group of answer choices
Taking naked long positions in either a call or forward will lead to an overall long position in the underlying security.
Options and forwards always have identical payoffs if the spot price remains the same.
Both options and forwards can be used to reduce exposure to foreign exchange risk.
Going long a naked put option and going short a naked forward both cause unlimited liability.
Both options and forwards require the payment of a premium at the initiation of the contract.
Forward contracts impose obligations on both parties in the transaction. Options contracts only impose an obligation on one party.
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