The Liquidity of the Futures Contract Used in a Hedge

question 4

True/False

The liquidity of the futures contract used in a hedge is very important to the hedger.

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Definitions:

Salvage Value

An asset's projected financial value at the end of its viability period.

Depreciation Expense

An accounting method for allocating the cost of a tangible asset over its useful life, representing the asset's consumption, wear and tear, or obsolescence.

Straight-Line Method

The straight-line method is a depreciation technique that allocates an equal amount of depreciation expense for a fixed asset to each year of its useful life.

Salvage Value

The estimated market valuation of an asset following the end of its useful duration.