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:

Self-Interest

The motivation of individuals to pursue their own objectives and benefits.

Ultimatum Game

A game in experimental economics in which two players decide how to divide a sum of money; the first player proposes a division, and the second player can accept or reject it, where rejection means neither player receives anything.

Neoclassical Economics

A framework in economics focusing on the determination of goods, outputs, and income distributions in markets through supply and demand, emphasizing rationality and marginal utility.

Sense of Fairness

An individual's perception of the balance and justice in social interactions and distribution of resources.