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:

Information Processing

The method by which individuals perceive, analyze, manipulate, use, and remember information, analogous to the way computers process data.

Psychoanalytic

Pertains to a theory and therapeutic method developed by Sigmund Freud, focusing on unconscious mental processes and early childhood experiences in shaping behavior and personality.

Sociocultural

Pertaining to the combination of social and cultural factors that influence an individual’s behavior, attitudes, and perceptions.

Bioecological

A theoretical model that emphasizes the importance of multiple levels of environmental influences, starting from the immediate context to broader societal levels, on individual development.