A Hedger Who Buys a Futures Contract Is Betting That

question 50

Multiple Choice

A hedger who buys a futures contract is betting that prices will _____ at the expiration of the contract.

• A)Decrease
• B)Increase
• C)Remain constant
• D)Guarantee high profits

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Definitions:

Necessary and Proper Clause

A provision in the U.S. Constitution granting Congress the power to pass all laws deemed necessary and proper for carrying out its duties.

Congress Powers

The legislative powers granted to the U.S. Congress by the Constitution, including taxing, spending, and regulating interstate commerce.

Rational Basis Test

A standard of judicial review that requires a law to be rationally related to a legitimate government interest.

Means-Ends Test

A method of ethics that evaluates actions by examining the goals they seek to achieve and the means used to achieve those goals.