A Call Option on a Futures Contract

question 7

Multiple Choice

A call option on a futures contract:

• A)gives the buyer the right to assume a sold position in the futures.
• B)gives the seller the right to assume a sold position in the futures.
• C)gives the buyer the right to assume a buy position in the futures.
• D)gives the seller the right to assume a buy position in the futures.

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Definitions:

Reverse Split

A corporate action which consolidates the number of existing shares of stock into fewer, proportionately more valuable, shares.

Shares Outstanding

Shares outstanding refers to the total number of shares of a company's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Long-Term Payout Ratio

The proportion of earnings paid out as dividends to shareholders over an extended period, often used as a measure of a company's dividend policy stability.

Dividend Policy

The approach a firm employs to determine the amount of dividends it will distribute to its shareholders.