In General, When Deciding Whether a Market Participant Needs to Buy

question 35

Multiple Choice

In general, when deciding whether a market participant needs to buy or sell futures contracts in order to hedge, the rule could be:

• A) buy futures if you have the underlying asset and sell futures if you need the underlying asset.
• B) sell futures if you have the underlying asset and buy futures if you need the underlying asset.
• C) buy futures if you want to speculate, sell futures if you want to hedge.
• D)buy futures if you are willing to have unlimited risk, sell futures if you want capped risk.

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Definitions:

1994 Amendments

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