In Reference to the Futures Market,a "Speculator

question 4

Multiple Choice

In reference to the futures market,a "speculator"

• A)attempts to profit from a change in the futures price.
• B)wants to avoid price variation by locking in a purchase price of the underlying asset through a long position in the futures contract or a sales price through a short position in the futures contract.
• C)stands ready to buy or sell contracts in unlimited quantity.
• D)wants to avoid price variation by locking in a purchase price of the underlying asset through a long position in the futures contract or a sales price through a short position in the futures contract,and also stands ready to buy or sell contracts in unlimited quantity.

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Definitions:

Population Mean

The average of all the items in a population, representing the central tendency.

Critical Value

A point on a statistical distribution that represents a threshold at which the null hypothesis is rejected if exceeded.

Alpha

Alpha, also known as the level of significance, indicates the threshold at which we reject the null hypothesis, typically set at 0.05 or 5%.

Two-tailed

A test of significance that checks for the possibility of either a positive or negative effect and doubles the significance level.