What does it mean to exercise an option contract?

When an option is "exercised", the financial transaction specified by the contract is carried out immediately and the option is then terminated..

The option is permited to expire without any transactions occuring.

We take it out for a walk in the park.

Any gains and losses due to changes in the market value of the underlying security are market to market, and additional margin is posted if needed.

What is a variable annuity?

A derivitive security which exchanges fixed interest payments for floatinng interest payments.

An investment product sold by an insurance company that makes fixed payments over time.

An investment product sold by an insurance company that makes payments based on the performance of an investment portfolio.

A type of property & casualty insurance.

What role does the Commodity Futures Trading Commission (CFTC) play in financial markets?

It is an independent federal regulatory agency that is responsible for the regulation of derivatives markets (including futures, options, and swaps).

It is the primary regulator the for equity markets & bond markets in the U.S..

It is a lobbying organization that promotes open markets and encourages the development of new energy and agricultural derivitives.

It is a non-governmental entity that acts as a self-regulatory organization in derivitive markets, and both writes and enforces rules for member firms.

Is the statement below true or false?

Futures contracts are leveraged investments, as futures traders must post and maintain only a small portion of the value of their futures position in their brokerage accounts.