A Cash-Settled Option Is Defined as an Option Which Does

question 15

Multiple Choice

A cash-settled option is defined as an option which does which one of the following?

• A) requires a cash deposit upon purchase
• B) has a foreign currency as its underlying asset
• C) has the U.S. dollar at its underlying asset
• D) entails a cash payment to the holder upon exercise
• E) offers the option to either deliver the underlying asset or a cash payment

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Definitions:

Marginal Social Benefit

The additional benefit to society resulting from one more unit of a good or service being produced and consumed.

Marginal Social Cost

The total cost society bears for the production of an additional unit of a good or service, including both external and private costs.

Coal Mine Pollution

Environmental contamination resulting from the operation of coal mines, including air and water pollution.

Marginal Social Cost

The total cost society bears for the production of an additional unit of a good, including both private costs and any external costs.