Exercise of a Put Option on Interest Rate Futures by the Buyer

question 42

True/False

Exercise of a put option on interest rate futures by the buyer of the option results in the buyer putting to the writer the bond futures contract at an exercise price higher than the currently trading bond future.

---

Definitions:

Interest Rate

The amount of money paid for the use of borrowed funds.

Legal/Regulatory

Pertaining to laws, regulations, and legal standards that govern the operations, actions, and compliance requirements of individuals and organizations.

Generic Competitive Strategies

Frameworks proposed by Michael Porter that describe three potential strategies to achieve a sustainable competitive advantage: cost leadership, differentiation, and focus.

Competitive Advantage

A scenario or element that positions a business in a stronger or more favorable spot relative to its competitors.