A Eurodollar Futures Option Contract Has a Strike Price of 97

question 3

Multiple Choice

A Eurodollar futures option contract has a strike price of 97 and the Eurodollar interest rate is 2.50%. What is the intrinsic value of the contract if the option is a put?

• A) $0
• B) $1,250
• C) $1,750
• D) $2,500

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Definitions:

Cash Payments

Transactions that involve the immediate outflow of cash to settle obligations or purchase goods and services.

Internal Control System

Procedures and processes implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Cash Receipts

The total amount of cash received by a company during a specified period from its various business activities.

Cash Payments

Transactions in which payment is made in the form of cash instead of credit.