Market Participants Can Use Interest Rate Futures to Control Interest

question 46

True/False

Market participants can use interest rate futures to control interest rate movements, speculate on a portfolio's risk exposure to interest rate changes, hedge against adverse interest rate movements, and enhance returns when futures are mispriced.

---

Definitions:

Standard Costing

A cost accounting method that assigns predefined costs to direct materials, labor, and overhead, used to compare against actual costs for performance analysis.

Labour Efficiency Variance

The discrepancy between the actual hours worked and the standard hours expected to produce a certain level of output.

Variable Overhead

Costs that change in proportion with production volume or business activity levels, such as utilities or raw materials.

Labour Rate Variance

Labour rate variance is the difference between the actual hourly wage paid to workers and the standard wage rate expected, indicating variations in labor cost.