Mr. Smith believes that there is going to be rise in the equities market. Based on this information, what would allow Mr. Smith

Question

Dennis_Churaev [7]

3 years ago

5

Mr. Smith believes that there is going to be rise in the equities market. Based on this information, what would allow Mr. Smith

to best take advantage of this situation?

Business

1 answer:

White raven [17] · Answer 1 · 2021-11-25T09:58:52+03:00

Answer:

The answer is 'Buy a Stock Index Future'

Explanation:

To take best advantage of this situation, Mr Smith should go long(buy) on this stock.

Stock Index Future js a method of derivates. Futures, like forward contract is a forward commitment which obligates the buyer to purchase an asset or the seller to sell an asset and have a predetermined future date and price. Future is used to hedge against worse future situations.