If a money manager believes stock prices will fall and knows that a block of funds will be received in the future, then he should ________.
A)sell stock index futures short
B)buy stock index futures long
C)stay out of the futures market
D)borrow and buy securities now

Question

Quizplus · Accepted Answer

The money manager should sell stock index futures short. This would allow the manager to lock in current prices and profit if the stock prices fall. Additionally, selling short allows the manager to make a profit without needing to invest any additional funds.

If a Money Manager Believes Stock Prices Will Fall and Knows