Buying a Call Futures Option Will

question 29

Multiple Choice

Buying a call futures option will

• A) maximize returns if the commodity price rises.
• B) require that a future on the commodity be sold.
• C) limit losses if the commodity price falls. to expiration.
• D) eliminate transaction costs.

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Definitions:

Legal Document

A formal document that records agreements, contracts, or declarations and is recognized and enforceable by law.

Face Value

The nominal value printed on a financial instrument like a bond or currency note, representing its legal value.

Issuer

An entity, such as a corporation or government, that develops and offers securities for sale to investors to raise capital.

Issued

Pertains to securities or other financial instruments that have been created and offered for sale to investors by a corporation or government entity.