Marcie Purchases a Call Option on Interest Rate Futures with an Exercise

question 20

Multiple Choice

Marcie purchases a call option on interest rate futures with an exercise price of 92-10. The premium on the call option is 2-24. Just before the expiration date, the price of Treasury bond futures (which will have a face value of $100,000 at maturity) is 97-14. At this time, Marcie decides to exercise the option and closes out the position by selling an identical futures contract. Marcie's net gain from this strategy is $____.

• A)- 2,687.50
• B)2,687.50
• C)2,375.00
• D)7,437.50
• E)None of these are correct.

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Definitions:

Triangulation

Using different research methods to answer the same question, in order to be more certain of the answer.

Statistical Significance

A measure that indicates how likely it is that a result obtained from data analysis is not due to chance.

Test-Retest Reliability

A measure of consistency where a test is administered to the same group of individuals at two different points in time, and the scores are correlated to assess the test's reliability over time.

Informant Report

A method of assessment where information about a subject is reported by someone else, often used in psychological evaluations.