AppliedMultiple choice
Why would a fund express a broad equity view with an index future rather than buying the constituents?
- AOne trade, far lower cost, and embedded financing
- BFutures have no exposure to the index level
- CFutures avoid all dividend risk
- DFutures are exempt from margin requirements
The worked solution is in Premium
The answer, the full working and the one idea to take away – for this and all 1,322 questions in the bank. Answer it in practice and your working is marked, with a known mistake named when you make one.
Reported in interviews at
More markets and products questions
- What is a market maker fundamentally selling?Foundation
- A corporate bond yields 250 basis points more than the matched Treasury.Foundation
- The E-mini S&P 500 future has a multiplier of $50 per index point.Foundation
- A company has a constant default intensity of 2% a year and bondholders expect…Applied
- Front-month crude trades at $70 and the next month at $72.Applied
- A crypto perpetual future is trading well above the spot index.Applied