Question: Discuss how stock index futures can be used for speculation and
Discuss how stock-index futures can be used for speculation and for hedging. What advantages are there to speculating with stock-index futures rather than specific issues of common stock?
Answer to relevant QuestionsDefine and differentiate among the following. Explain how each is related to federal income taxes. a. Active income b. Portfolio and passive income c. Capital gain d. Capital loss e. Tax planning f. Tax-advantaged ...What are futures options? Explain how they can be used by speculators. Why would an investor want to use an option on an interest-rate futures contract rather than the futures contract itself? Briefly define each of the following: a. Settlement price b. Daily price limit c. Open interest d. Maximum daily price range e. Delivery month Not long ago, Vanessa Woods sold her company for several million dollars (after taxes). She took some of that money and put it into the stock market. Today Vanessa’s portfolio of blue-chip stocks is worth $3.8 million. ...George Seby is thinking about doing some speculating in interest rates. He thinks rates will fall and, in response, the price of Treasury bond futures should move from 92–15, their present quote, to a level of about 98. ...
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