If an investor strongly believes that the stock market is going to have a sharp increase shortly, he or she could maximize profit by:
A) shorting stock-index futures contracts.
B) hedging current long positions.
C) buying treasury bond futures contracts.
D) buying stock-index futures contracts.

Question

Quizplus · Accepted Answer

Buying stock-index futures contracts allows investors to leverage their position and benefit from the anticipated sharp increase in the stock market, maximizing potential profits.

If an Investor Strongly Believes That the Stock Market Is