Futures Markets Can Be Used for Speculation

question 51

Multiple Choice

Futures markets can be used for speculation. If you believe that the spot price of T-bills is going to be much higher by next June, which of the following would be the best way to act on this belief?

• A)You could sell T-bills into the spot market now.
• B)You could sell a futures contract on T-bills.
• C)You could buy a futures contract on T-bills.
• D)You could buy T-bills on the spot market in June.

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Definitions:

Departmental Sales

Revenue generated from the sales activities of specific departments within a retail or corporate setting, tracked to evaluate the performance of each department.

Retail Store

A business establishment that sells goods or services directly to consumers, primarily for personal or household consumption.

Depreciation

The systematic allocation of the cost of a tangible asset over its estimated useful life, recognizing the decrease in value over time.

Allocation Bases

Criteria or metrics used to distribute overhead costs to different departments or products in a company, ensuring accurate cost accounting.