The major difference between options on real assets and options on financial assets is that options on:
A) financial assets are costly.
B) financial assets have a higher probability of positive payoff.
C) real assets are implicit, rather than explicit.
D) real assets are not influenced by price volatility.

Question

Quizplus · Accepted Answer

Options on financial assets are usually explicit, with clearly defined terms and trading mechanisms. Options on real assets, on the other hand, are often implicit and not traded on organized exchanges. Real assets are also subject to physical factors such as weather, natural disasters, and technological advancements that can influence their value, whereas financial assets are mostly affected by market conditions and investor sentiment.

The Major Difference Between Options on Real Assets and Options