According to the Text, When a Financial Institution Sells Futures

question 18

Multiple Choice

According to the text, when a financial institution sells futures contracts on debt securities in order to hedge against an increase in interest rates, this is referred to as

• A)a long hedge.
• B)a short hedge.
• C)a closed out position.
• D)basis trading.

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Definitions:

Regression Line

A line that best fits a set of data points in linear regression analysis, showing the general direction in which the data tend to go.

Prediction Interval

An estimate of the interval within which future observations will fall, with a certain probability, given what has already been observed.

One-Time Occurrence

An event or happening that takes place once and is not repeated.

API Gravity

A measure of how heavy or light a petroleum liquid is compared to water, used in the oil and gas industry to classify oils.