The Purpose of a Spreading Strategy with Futures Contracts Is

question 56

Multiple Choice

The purpose of a spreading strategy with futures contracts is

• A) to maximize potential profit.
• B) increase leverage.
• C) limit potential losses.
• D) hedge against price changes in the underlying commodity.

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Definitions:

Base-Rate Information

Pallid, factual, statistical information about an entire class of events.

Paired Distinctiveness

Illusory correlation in which items are seen as belonging together because they share some unusual feature.

Availability Heuristic

A cognitive short-cut in which the frequency or likelihood of an event is based on how quickly instances or associations come to mind.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.