Which of the following is a likely reason for a portfolio manager to sell a stock index future short?
A) He believes the market will rise.
B) He wants to lock in current prices.
C) He wants to reduce stock market risk.
D) Both B and C are correct.

Question

Quizplus · Accepted Answer

Selling a stock index future short is a strategy used to hedge against the risk of the stock market declining. It allows the portfolio manager to lock in current prices for the future, effectively reducing stock market risk if they believe the market might fall.

Which of the Following Is a Likely Reason for a Portfolio