Series 7 Exam Question 91: Answer and Explanation

Question: 91

When the OCC receives an exercise notice, it must determine which firm is responsible for exercising the option contract:

• A. randomly
• B. first in first out
• C. based on size
• D. by any method fair and reasonable

Correct Answer: A

Explanation:

A. When exercising an option, the OCC (Options Clearing Corporation) chooses the brokerage firm to honor the contract randomly.