Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Curtin University - FINANCE INVE3000 An investor buys a put option on a futures contract
Curtin University - FINANCE INVE3000
An investor buys a put option on a futures contract. Which answer is true?
-
- The investor takes a long position in the futures if he/she exercises the put option.
- The investor takes a short position in the future if he/she exercises the put option.
- The investor takes a short position in the futures if he/she does not exercise the put option.
- The investor can choose whether to go long or short when he/she exercises the put option.
- None of the above
Expert Solution
Answer:
b ) The investor takes a short position in the future if he/she exercises the put option .
Step-by-Step explanation
In Finance, a put option gives the buyer, a right, not an obligation to sell the assets at an agreed price on or before a particular date. Also, a short position is defined as the sale of an asset that the seller does not own. Thus, when an investor exercises his put option, it is said that the investor engages in a short position in the future. Hence, the right answer is (B).
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
