An Option on a Futures Contract, Commonly Referred to as a Futures

question 60

Multiple Choice

An option on a futures contract, commonly referred to as a futures option, gives the buyer the right to buy from or sell to the writer a designated futures contract ________.

• A) at an uncertain price on the expiration date.
• B) at a random price at any time during the life of the option.
• C) at a designated price at a specified time during the life of the option.
• D) at a designated price at any time during the life of the option.

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Definitions:

Level 3 Assets

These are financial assets and liabilities that are hard to value because they do not have a readily observable market price, often requiring significant estimation in their valuation.

Fair Value Accounting

An accounting approach where companies measure and report the values of their assets and liabilities on the basis of the actual or estimated fair market prices.

Book Value

The net value of a company's assets minus its liabilities, as recorded on its financial statements.

Market Valuations

The process of determining the present value of an asset or a company based on market prices, often used to evaluate the worth of stocks or other securities.