According to the Text, When a Financial Institution Sells Futures

question 18

Multiple Choice

According to the text, when a financial institution sells futures contracts on debt securities in order to hedge against an increase in interest rates, this is referred to as

• A)a long hedge.
• B)a short hedge.
• C)a closed out position.
• D)basis trading.

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Definitions:

Quintet

A group of five lines or peaks observed close together in a spectroscopic measurement, often indicative of a specific atomic or molecular structure.

Triplet

In spectroscopy, a pattern of three closely spaced spectral lines or signals, often due to splitting in NMR or EPR spectroscopy caused by spin-spin coupling.

Signals

Manifestations or indicators that convey information or data, especially within the context of communication systems or analytical instrumentation.

Diastereotopic

Describes hydrogen atoms or groups in a molecule that are not equivalent in the three-dimensional structure, leading to different stereochemical outcomes.