CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

When a call option on a future is exercised, the buyer receives ______.

A. an option to purchase the underlying future
B. a long position in the underlying future and a cash payment
C. the physical good
Correct Answer: B

The underlying asset of a call option on a future is the futures contract. When a call futures option is exercised, the buyer receives a long position in the future and a cash payment equal to the cash settlement price minus the exercise price of the futures option. Since the underlying asset is not a physical good, no physical good is received when the call option on a future is exercised.

User Contributed Comments 6

User Comment
gill15 ummm...I dont want my cfa anymore
Bududeen it is better you dont want it anymore because you are in contravention of the codes @ standards for using CfA as a noun rather than as an adjective
tomalot CFA is all capitals buddy! Contravention etc
ascruggs92 Also violated ethics because you have no claim to the CFA designation other than being a candidate for level 1. Boom
maryprz14 lol
khalifa92 long and short positioned arent supposed to be here, they are for the next coming LOS.
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