If You Were Bearish on the Near-Term Outlook for the Stock

question 97

True/False

If you were bearish on the near-term outlook for the stock market but did not want to sell your portfolio, you could hedge against the decline by selling stock index futures.

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Definitions:

Deferred Tax Liability

A tax obligation that a company owes in the future due to differences between accounting practices and tax regulations.

Depreciable Asset

An asset that loses value over time due to wear and tear or obsolescence, which can be depreciated over its useful life.

Realisation of Profit

The process by which a profit is recognized on the books once a transaction is completed and the revenue can be reliably measured.

External Party

An individual, group, or organization outside of a company that can affect or be affected by the business's activities.