An Entity That Holds a Well Diversified Portfolio of Shares

question 74

True/False

An entity that holds a well diversified portfolio of shares and wishes to use futures to protect its investments for possible downturns should enter into a sell position in a futures contract.

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Definitions:

Supplier

A person or organization that provides goods or services to another entity, typically as part of a supply chain.

Cash

Currency and other liquid instruments in a financial system or on a company's balance sheet used for transactions or settling debts.

Inventory

The goods and materials that a business holds for the purpose of resale or production.

Credit

The trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately but promises either to repay or return those resources at a later date.