Consider a European One-Year Call Futures Option and a European

question 19

Multiple Choice

Consider a European one-year call futures option and a European one-year put futures options when the futures price equals the strike price.Which of the following is true?

• A) The call futures option is worth more than the put futures option
• B) The put futures option is worth more than the call futures option
• C) The call futures option is sometimes worth more and sometimes worth less than the put futures option
• D) The call futures option is worth the same as the put futures option

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Definitions:

Market

Any institution or mechanism that brings together buyers (demanders) and sellers (suppliers) of a particular good or service.

Majority Voting

A decision-making process where the choice that gathers more than half of the votes wins, commonly used in democratic elections and organizations.

Public Good

A product or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Total Benefits

The complete range of advantages or improvements gained from a product or service, often assessed in economic terms.