A Deep In-The-Money Call Option on Futures Is Exercised Early

question 19

Multiple Choice

A deep in-the-money call option on futures is exercised early because

• A)the intrinsic value is maximized
• B)it behaves like a futures but ties up funds
• C)the futures price is not likely to rise any further
• D)all of the above
• E)none of the above

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Definitions:

Interest Rates

The cost of borrowing money or the reward for saving, typically expressed as a percentage.

Nationalize

The process by which a government takes control of a private industry or assets and transforms it into state ownership.

Profit Maximization

The technique a corporation employs to determine the pricing and level of output that maximizes earnings.

Vicious-Circle-Of-Poverty

A self-perpetuating condition where poverty leads to circumstances that perpetuate poverty, making it difficult to break the cycle.