If You Sell Twenty-Five $100,000 Futures Contracts to Hedge Holdings

question 63

Multiple Choice

If you sell twenty-five $100,000 futures contracts to hedge holdings of a Treasury security,the value of the Treasury securities you are holding is

• A)$250,000.
• B)$1,000,000.
• C)$2,500,000.
• D)$5,000,000.

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Definitions:

Credits

A bookkeeping entry that raises a liability or equity account or lowers an asset or expense account.

Journal Entries

The basic building blocks of accounting, representing financial transactions recorded in a company's ledger.

Posting

The process of transferring financial information from the journal to the respective accounts in the ledger, a crucial step in the accounting cycle.

Cash Account

A financial account that records cash transactions in and out.