The Ability to Obtain a Given Equity Position at a Reduced

question 14

Multiple Choice

The ability to obtain a given equity position at a reduced capital investment, and therefore magnify returns, is known as

• A) leverage.
• B) straddling.
• C) hedging.
• D) triple witching.

---

Definitions:

Merchandise Inventory

Goods held by a business for the purpose of sale to customers in the ordinary course of business.

Forward Contract

A non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Ordering Merchandise

The process of purchasing goods for sale, typically from suppliers or manufacturers, by a retail or wholesale business.

Spot Rate

The spot rate refers to the current exchange rate at which a currency can be bought or sold for immediate delivery.