The Main Advantage of Using Options on Futures Contracts Rather

question 88

Multiple Choice

The main advantage of using options on futures contracts rather than the futures contracts themselves is that interest-rate risk is

• A) controlled while preserving the possibility of gains.
• B) controlled while removing the possibility of losses.
• C) not controlled but the possibility of gains is preserved.
• D) not controlled but the possibility of gains is lost.

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Definitions:

Low-Quality Goods

Products that do not meet the standard expectations of functionality, durability, or appearance imposed by consumers or regulatory agencies.

Adverse Selection

A situation in commercial markets where the seller has more information than the buyer, often leading to the buyer unknowingly choosing inferior products or terms.

Inadequate Coverage

Refers to insurance policies that do not provide sufficient protection against losses.

Complex Information

Information that is intricate due to its structure, content, or presentation, often requiring specialized knowledge to understand.