You Take a Long Position in a Futures Contract of One

question 64

Multiple Choice

You take a long position in a futures contract of one maturity and a short position in a contract of a different maturity,both on the same commodity.This is called __________.

• A) a cross hedge
• B) a reversing trade
• C) a spread position
• D) a straddle

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Definitions:

Limited Liability

A legal structure that protects company owners' personal assets from being used to fulfill the company's debts and liabilities.

Limited Life

Partnership is dissolved by admission, withdrawal, or death of a partner. Although the partnership is dissolved, the operations of the business can continue.

Bankrupt

The legal status of a person or entity that cannot repay the debts it owes to creditors, leading to legal intervention for asset distribution.

Accounts Payable

Liabilities of a business that are due to creditors within a short period, usually one year, and are to be paid in cash or other current assets.