Multiple Choice
In general, when deciding whether a market participant needs to buy or sell futures contracts in order to hedge, the rule could be:
A) buy futures if you have the underlying asset and sell futures if you need the underlying asset.
B) sell futures if you have the underlying asset and buy futures if you need the underlying asset.
C) buy futures if you want to speculate, sell futures if you want to hedge.
D) buy futures if you are willing to have unlimited risk, sell futures if you want capped risk.
Correct Answer:
Verified
Correct Answer:
Verified
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