A Transaction in Which an Investor Holds a Position in the Spot

question 25

Multiple Choice

A transaction in which an investor holds a position in the spot market and sells a futures contract or writes a call is

• A)a gamble
• B)a speculative position
• C)a hedge
• D)a risk-free transaction
• E)none of the above

---

Definitions:

Average Tax Rate

The ratio of total taxes paid to the total taxable income, reflecting the percentage of income that goes to taxes.

Tax-Free

Earnings or financial transactions that are exempt from taxation by the government.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Average Tax Rate

The portion of an individual's or entity's taxable income that is paid in taxes, calculated by dividing the total tax amount by the taxable income.