If an Investor Exercises a Cash Settled Derivative

question 63

Multiple Choice

If an investor exercises a cash settled derivative,

• A)the transaction entails only a bookkeeping entry
• B)must purchase the underlying instrument from the writer
• C)immediately buy a put option to offset the call option
• D)immediately write another call option to offset
• E)none of the above

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Definitions:

Automobile Accidents

Automobile accidents refer to collisions involving one or more vehicles, often resulting in property damage, personal injury, or fatalities.

Alcoholism

A chronic disease characterized by uncontrolled drinking and preoccupation with alcohol, leading to mental and physical health problems.

Drug Abuse

The habitual taking of illegal drugs or the misuse of prescription or over-the-counter drugs with negative consequences.

Secondary Aging

Changes in physical and cognitive functioning that are due to illness, health habits, and other individual differences, but that are not due to increased age itself and are not inevitable.