Investors Can Use Stock Index Futures to Speculate on Stock

question 20

True/False

Investors can use stock index futures to speculate on stock prices, control a portfolio's price risk exposure, hedge against adverse stock price movements, construct indexed portfolios, engage in index arbitrage, and create a synthetic put option.

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Definitions:

Beta Distribution

A statistical distribution representing probabilities of outcomes across a range of 0 to 1, often used in Bayesian statistics for estimating unknown parameters.

PERT Analysis

A project management tool used to schedule, organize, and coordinate tasks within a project, which stands for Program Evaluation and Review Technique.

Expected Activity Times

Predicted durations for tasks or activities within a project, often based on historical data and used in planning and scheduling.

CPM Network

Critical Path Method Network, a project management tool that models tasks and their dependencies as a network to identify key deadlines and the longest stretch of dependent activities.