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München Microchips Manufactures Silicon Microchips in a Sterile Plant

Question 3

Multiple Choice

München Microchips manufactures silicon microchips in a sterile plant. Wittenburg Industrial Cleaning provided expensive cleaning and sterilization for München Microchips. As the two companies contracted, München Microchips offered Wittenburg 250,000 common equity shares at €5 each in return. Wittenburg bought the shares and subsequently sold them at the prevailing market price of €20 per common equity share. Which derivative instrument does this scenario best represent?


A) Forward
B) Future
C) Swap
D) Option
E) Not a derivative

Correct Answer:

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