A Position Consisting of Futures Contracts Settling on Different Dates

question 9

Multiple Choice

A position consisting of futures contracts settling on different dates is known as:

• A) a strip.
• B) comex trade.
• C) cash- and- carry arbitrage.
• D) a hedge ratio.

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Definitions:

Friedman Rule

A monetary policy rule proposed by economist Milton Friedman, suggesting that the optimal nominal interest rate is zero to eliminate the opportunity cost of holding money.

Deflation

A decrease in the general price level of goods and services, often indicating an economic slowdown.

Inflation

The velocity at which the aggregate price level for goods and services elevates, thereby reducing purchasing capability.

Nominal Interest Rate

The interest rate before adjustments for inflation. It is the rate quoted on loans and deposits.