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:

Policy of Containment

A foreign policy strategy aimed at preventing the spread of communism, adopted by the United States during the Cold War.

Communist Victory

Refers to a successful achievement or takeover by communist forces or parties in a political or military struggle.

Atomic Bomb

A powerful weapon that releases enormous energy through nuclear reactions, first used in warfare by the United States during World War II.

Military Buildup

The process of nations increasing their military capability in terms of personnel, equipment, and technology, often in response to perceived threats or for strategic advantages.