n NISM Certifications
X NISM Series X
Medium

The action of taking an opposite position in the futures or options market to one’s position in the equity segment is known as ______.

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Hedging

    Correct answer

  2. B

    Arbitrage

  3. C

    Speculation

  4. D

    Overtrading

Why this is the answer

Hedging involves taking an opposite position in the derivatives market to protect an existing position in the underlying asset from adverse price movements.

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