A Futures Position That Is Equal, but Opposite, the Position

question 57

Multiple Choice

A futures position that is equal, but opposite, the position you have in the underlying asset defines which one of the following terms?

• A)short hedge
• B)long hedge
• C)full hedge
• D)partial hedge
• E)underlying hedge

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Definitions:

Net Credit Sales

Sales made on credit minus any sales returns or allowances, reflecting the actual credit sales revenue.

Uncollectible Accounts

Debts owed to a company that are considered to be uncollectable and are therefore written off as a bad debt expense.

Estimated Uncollectible

An accounting term referring to the portion of accounts receivable that a company does not expect to collect.

Allowance Method

is an accounting technique that estimates and reports the likely amount of uncollectible accounts receivable as an allowance for doubtful accounts.