Which of the Following Best Describes "Stack and Roll

question 11

Multiple Choice

Which of the following best describes "stack and roll"?

• A) Creates long-term hedges from short term futures contracts
• B) Can avoid losses on futures contracts by entering into further futures contracts
• C) Involves buying a futures contract with one maturity and selling a futures contract with a different maturity
• D) Involves two different exposures simultaneously

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Definitions:

Probability

The likelihood or chance of an event occurring.

Poisson Distribution

A probability distribution that models the number of events occurring in a fixed interval of time or space, given the events occur with a known constant rate and independently of the time since the last event.

Post Office

A public institution responsible for the collection, sorting, transport, and delivery of mail.

Probability

The quantification of how likely an event is to occur, expressed as a number ranging between 0 and 1.