What amount must a call writer pay if a cash-settled index call is exercised?
A) difference between the index level and the exercise price
B) exercise price
C) difference between the exercise price and the index level
D) index level
E) none of the above

Question

Quizplus · Accepted Answer

When a cash-settled index call is exercised, the call writer must pay the difference between the index level and the exercise price, if the index level is above the exercise price.

What Amount Must a Call Writer Pay If a Cash-Settled