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:

Satisfy Unlimited Wants

The economic principle that refers to the constant desire for goods and services exceeding the limited resources available to fulfill those desires.

Human Skills

The capabilities and expertise individuals possess that enable them to perform tasks, solve problems, and produce goods or offer services.

Capital

The buildings, equipment, and human skills used to produce goods and services.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.