INVESTMENTS (LOOSELEAF) W/CONNECT
11th Edition
ISBN: 9781260465945
Author: Bodie
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 22, Problem 6PS
Summary Introduction
To think critically about: Withdrawal of the capitals from the future market for other productive uses.
Introduction: Future market is a platform to purchase or sell the assets and commodities at a predetermined value on a future date. This agreement is performed by the mutual concern of both parties.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Evaluate the criticism that futures markets siphon off capital from more productive uses.
Explain how the futures markets can be used to reduce interest rate and input price risk.
Describe how commodity futures markets can beused to reduce input price risk.
Chapter 22 Solutions
INVESTMENTS (LOOSELEAF) W/CONNECT
Knowledge Booster
Similar questions
- Discuss the factors giving rise to an inverted futures market for a storable versus a non-storable commodity. What are the implications for a hedger?arrow_forwardAnalyze the use of FX Derivatives, Cost of Capital & Dynamic Risk Management Strategies?arrow_forwardAn efficient capital market is best defined as a market in which security prices reflect which one of the following? Multiple Choice A Current inflation B A risk premium C All available information D The historical arithmetic rate of return E The historical geometric rate of returnarrow_forward
- Suggest what is the best financial instrument to offset market risk exposure and from market volatility? WHY?arrow_forwardIn the futures markets, arbitrageurs are mainly interested in: a. reducing their exposure to risk of price changes. b. increasing market liquidity. c. reducing the spread between the bid and ask prices on bonds. d. attempting to make a profit by taking advantage of price differentials between different markets.arrow_forwardExplain the concept of efficient markets. Are the equity capital markets inefficient?arrow_forward
- Explain how the portfolio approach to investment allows the reduction of risk and why Beta therefore is the most appropriate measure of stock risk?arrow_forwardWhy is marking to market important? Examine the significance of market index futures in an economy and to investors?arrow_forwardDiscuss the problems of identifying speculative bubbles in marketsarrow_forward
- In the capital asset pricing model, the general risk preferences of investors in the marketplace are reflected by ________. the level of the security market line the slope of the security market line the difference between the beta and the risk-free rate the risk-free ratearrow_forwardWhich of the following is correct with regards to Theories of Term Structure? When the shape of the yield curve depends on investors’ expectations about prospective prevailing interest rates, the Pure Exception Theory is being applied. When the economic outlook is improving, the yield curve inverts as it reflects no changes in inflation premium. The liquidity preference theory suggests that long-term rates are generally higher than short-term rates since investors perceive more liquidity in long-term investments. Under the Market segmentation theory, there is an apparent relationship between the yield curve and the prevailing rate of returns in each market segment.arrow_forwardIn contrast to the capital asset pricing model, arbitrage pricing theory:a. Requires that markets be in equilibrium.b. Uses risk premiums based on micro variables.c. Specifies the number and identifies specific factors that determine expected returns.d. Does not require the restrictive assumptions concerning the market portfolio.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning