_________ Take Positions in Financial Futures to Reduce Their Exposure

question 42

Multiple Choice

  _________ take positions in financial futures to reduce their exposure to future movements in interest rates or stock prices; ________ commonly take the opposite position and thus serve as counterparties on many transactions.

• A)Speculators; hedgers
• B)Hedgers; speculators
• C)Arbitrageurs; speculators
• D)Hedgers; arbitrageurs

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Definitions:

Capital Structure

Capital Structure is the mix of debt and equity financing a company uses to fund its operations and growth.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be repaid at a later date, usually with interest.

Equity

The owner's interest in an asset or business, representing the residual value after liabilities are deducted from assets.

Financial Manager

A professional responsible for the financial health of a corporation, overseeing investment activities, and planning strategies for long-term financial goals.