What Is Exchanged When a Put Option on an Interest

question 17

Multiple Choice

What is exchanged when a put option on an interest rate futures is exercised?

• A) A long position in a futures contract for the holder of the option and a short position in a futures contract for the option writer
• B) A short position in a futures contract for the holder of the option and a long position in a futures contract for the option writer
• C) Cash payoff, a long position in a futures contract for the holder of the option, and a short position in a futures contract for the option writer
• D) Cash payoff, a short position in a futures contract for the holder of the option, and a long position in a futures contract for the option writer

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Definitions:

Exponential

Relating to a mathematical function or model that describes exponential growth or decay, where the rate of change is proportional to the current value.

Linear

Pertaining to or resembling a line; involving a sequence of events or elements that proceed in a straight or direct path with no deviations.

Fuel Efficiency

A measure of how far a vehicle can travel on a specified amount of fuel, usually expressed in miles per gallon (mpg) or liters per 100 kilometers (l/100km).

Car's Weight

The car's weight refers to the total mass of a vehicle, often measured in pounds or kilograms, including all its components and contents.