A Hedge of Interest Rate Risk with a Put Option

question 58

True/False

A hedge of interest rate risk with a put option on futures completely offsets gains but only partly offsets losses.

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Definitions:

Basaltic Lava

A type of molten rock that is low in silica and flows easily, typically forming smooth, broad volcanic features.

Shield Volcano

A type of volcano with broad, gently sloping sides, built by the eruption of low-viscosity lava that can flow long distances.

Caldera-forming

Refers to the process through which large craters are formed by the collapse of land following a volcanic eruption.

Natural Disasters

Severe, sudden events caused by environmental factors that result in significant damage or loss of life.