When a Futures Call Option on a Commodity Is Exercised

question 13

Multiple Choice

When a futures call option on a commodity is exercised the option owner receives a futures contract on the commodity plus a cash payment equal to the difference between the:

• A) current options price and the current futures price.
• B) spot and forward futures prices.
• C) strike price on the option and the current futures price.
• D) exercise price and the current options price.
• E) exercise price and the strike price.

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Definitions:

Early Start Date

The earliest possible date on which a particular task or activity can begin, assuming all prior necessary conditions are met.

Late Start Date

The latest possible date a task or project component can begin without delaying the project deadline.

Total Float

The amount of time that a project task can be delayed without causing a delay to subsequent tasks or the project completion date.

Critical Path

Identifies the longest sequence of dependent tasks in a project, determining the shortest possible duration to complete the project.