A Trader Uses 3-Month Eurodollar Futures to Lock in a Rate

question 18

Multiple Choice

A trader uses 3-month Eurodollar futures to lock in a rate on $5 million for six months.How many contracts are required?

• A) 5
• B) 10
• C) 15
• D) 20

---

Definitions:

Degrees of Freedom

An estimate of the number of independent values in a statistical calculation that can vary without violating any constraints.

Level of Significance

The probability of rejecting the null hypothesis when it is actually true, used as a threshold for determining statistical significance.

Chi-Square Distribution

A statistical distribution that is used to describe the distribution of the sum of squared random variables, commonly used in hypothesis testing and constructing confidence intervals.

Degrees of Freedom

The number of independent values or quantities which can vary in the analysis without violating any restrictions.