A Disadvantage of Real Asset Hedges Is That ______

question 40

Multiple Choice

A disadvantage of real asset hedges is that ______.

• A) bid-ask spreads can be large
• B) daily marking to market can cause cash flow mismatches
• C) option premiums can be large
• D) they are unlikely to be zero-NPV transactions
• E) they come in only a limited number of currencies and maturities

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Definitions:

Scores

Quantitative measures or values used to represent the performance or ability of an individual or group, often in the context of exams, tests, or games.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases.

Hair Length

A physical measurement referring to the length of hair strands from their roots to their ends.

Automobile

A wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor.