Suppose You Have £30,000 Invested in the Stock Market and Your

question 25

Essay

Suppose you have £30,000 invested in the stock market and your banker comes to you and tries to get you to move that money into the bank's certificates of deposit (CDs).He explains that the CDs are 100% government insured and that you are taking unnecessary risks by being in the stock market.How would you respond?

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Definitions:

Commodities

Raw materials or primary agricultural products that can be bought and sold.

Futures Exchange

A Futures Exchange is a central marketplace where people can trade standardized futures contracts; that is, contracts to buy or sell assets at a future date at an agreed-upon price.

Interest Rate Swap

A financial derivative contract where two parties exchange interest rate payments, typically one with a fixed rate and the other with a floating rate.

Futures Put Option

A financial contract giving the buyer the right, but not the obligation, to sell a futures contract at a specified price within a specified time.