You Take a Long Position in a Futures Contract of One

question 72

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) reversing trade
• C) spread position
• D) straddle

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Definitions:

Quick Assets

Highly liquid assets, including cash, accounts receivable, and marketable securities, which can be quickly converted into cash.

Short-Term Investments

Short-term investments are financial assets that are expected to be converted into cash within one year and are typically used by firms to manage surplus cash efficiently.

Current Receivables

Short-term financial assets that are due to be received within one year, typically from customers who owe the company money for goods or services provided.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.