Chapter 04 · Section 4.1

Cash Settlement

Which of the following futures and option contracts must necessarily be cash settled?

a) Interest rate futures options.
b) Interest rate options.
c) Stock index options.
d) Consumer price index futures.
e) Stock options.
• f) c and d
  Yes. A stock index or a consumer price index cannot be delivered, so an option or futures contract has to be based on the cash settlement mechanism. Continue

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