Which One of the Following Is the Strategy of Earning

question 4

Multiple Choice

Which one of the following is the strategy of earning risk-free profits by taking advantage of any unusual differences between cash and futures prices?

• A)cash-futures arbitrage
• B)mark to market
• C)margin calling
• D)basis recognition
• E)cash spotting

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Definitions:

Current Ratio

A measure of liquidity calculated by dividing a company's current assets by its current liabilities, indicating how well it can cover its short-term obligations.

Capital Lease

A lease agreement that transfers substantially all the risks and rewards of ownership of the asset to the lessee, and is recorded as an asset and liability on the balance sheet.

GAAP

Generally Accepted Accounting Principles, a framework of accounting standards, rules, and procedures used in the compilation of financial statements in the US.

Lease Capitalization Criteria

The standards or requirements used to determine whether a lease should be recorded as an asset and liability on the balance sheet.