Which Two of the Following Are True When Futures Prices

question 4

Multiple Choice

Which two of the following are true when futures prices exceed spot prices? choose two)

• A) American call options on futures are worth more than the corresponding American call option on spot.
• B) American call options on futures are worth less than the corresponding American call option on spot.
• C) American put options on futures are worth more than the corresponding American put option on spot.
• D) American put options on futures are worth less than the corresponding American put option on spot.

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Definitions:

Basalt Magma

A type of magma that is low in silica and typically originates from the upper mantle, leading to the formation of basalt rock upon cooling.

Volcanic Eruptions

A natural geologic process where magma, ash, and gases are expelled from a volcano.

Columbia Plateau

A geologic and geographic region in the Pacific Northwest of the United States, characterized by a predominately basaltic lava landscape.

Flood Basalts

Large-scale volcanic events that result in the extensive outpouring of basalt lava over vast areas, creating thick, layered volcanic rock formations.