Buyer of futures contract and buyer of option contract

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Reference no: EM132068887

1. A firm's WACC:

A) Is the proper discount rate for every project the firm undertakes

B) Is used to value all of the firm's existing projects

C) Is a benchmark discount rate that is adjusted for the riskiness of each project

D) Is an informational value only and should never be used as a discount rate

2. One distinguishing difference between the buyer of a futures contract and the buyer of an option contract is that the futures buyer:

A) Pays a much higher premium than option buyers

B) Has an obligation to purchase, not a choice

C) Can lose no more than initial premium

D) Has increased rather than reduced risk

Reference no: EM132068887

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