Which of the Following Is Acquired (In Addition to a Cash

question 4

Multiple Choice

Which of the following is acquired (in addition to a cash payoff) when the holder of a call futures exercises?

• A) A long position in a futures contract
• B) A short position in a futures contract
• C) A long position in the underlying asset
• D) A short position in the underlying asset

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Definitions:

Stock Dividends Distributable

Shares that are to be given to shareholders as dividends, which have been declared by a company’s board but have not yet been distributed.

Equity Account

An account representing the owner's or shareholders' residual interest in the assets of the entity after deducting liabilities.

Stockholders

Stockholders are individuals or entities that own shares of stock in a corporation, thereby holding ownership interests and potentially benefiting from the company's profitability through dividends and stock price appreciation.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often providing dividends before common shares.