A broker-dealer may go short on S&P 500 index futures to minimize
A) market risk.
B) interest rate risk.
C) exchange rate risk.
D) unsystematic risk.

Question

Quizplus · Accepted Answer

Going short on S&P 500 index futures would hedge against market risk, as it would provide a way to profit from a decline in the market. It would not address interest rate risk, exchange rate risk, or unsystematic risk, as these are different types of risks that require different types of hedging strategies.

A Broker-Dealer May Go Short on S&P 500 Index Futures