How Is the Cost of a Delivery Option Paid

question 44

Multiple Choice

How is the cost of a delivery option paid?

• A)the long pays the short with a cash settlement
• B)the short pays the long with a cash settlement
• C)a higher closing futures price
• D)a lower closing futures price
• E)none of the above

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Definitions:

Nuclear Power Plant

A facility that generates electricity by using nuclear reactions to produce heat, which then is used to power steam turbines.

Discrete Random Variables

Variables in statistical analysis that can take on a countable number of distinct values, often representing occurrences.

Continuous Random Variables

Variables that can take on an infinite number of values within a given range.

Probability Density

A function that describes the relative likelihood for a random variable to take on a given value.