In General,when Deciding Whether One Needs to Buy or Sell

question 91

Multiple Choice

In general,when deciding whether one 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:

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