In which of the following situations would you hedge using a futures contract?
A. You are long in the cash market, the price is at a historical high, and you are certain that the price will decline.
B. You are long in the cash market, the price is at a historical low, and you are certain that the price will increase.
C. You are short in the cash market, the price is at a historical high, and you are certain that the price will decrease.
D. You are short in the cash market, the price is at a historical low, and you are certain that the price will decrease further.
Ans: A. You are long in the cash market, the price is at a historical high, and you are certain that the price will decline.
You might also like to view...
The opportunity cost of good A in terms of good B is equal to the
A) money price of good A minus the money price of good B. B) money price of good B minus the money price of good A. C) ratio of the money price of good A to the money price of good B. D) ratio of the money price of good B to the money price of good A.
Which of the following is an example of positive statement?
A. The state government should allocate more funds toward education. B. Teachers should be paid higher salaries. C. Individuals with a bachelor's degree earn higher average incomes than those with only a high school diploma. D. The consumption of marijuana is unacceptable and should never be legally allowed in a society.
Within certain limits, the reserve requirement for check able deposits are established by
a. Congress. b. the U.S. president. c. each Federal Reserve Bank. d. the Board of Governors.
A chewing gum manufacturer adds a jalapeño-flavored bubble gum to its product mix. This is an example of horizontal differentiation.
Answer the following statement true (T) or false (F)