A Hedge Ratio Can Be Computed as

question 25

Multiple Choice

A hedge ratio can be computed as

• A) profit derived from one futures position for a given change in the exchange rate divided by the change in value of the unprotected position for the same exchange rate.
• B) the change in value of the unprotected position for a given change in the exchange rate divided by the profit derived from one futures position for the same exchange rate.
• C) profit derived from one futures position for a given change in the exchange rate plus the change in value of the unprotected position for the same exchange rate.
• D) the change in value of the unprotected position for a given change in the exchange rate plus by the profit derived from one futures position for the same exchange rate.

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Definitions:

Larynx

A complex structure in the neck involved in breathing, producing sound, and protecting the trachea against food aspiration.

Esophagus

The muscular tube that connects the throat (pharynx) with the stomach, allowing for the passage of food.

Trachea

The windpipe, a tube that connects the larynx to the bronchi of the lungs, providing a path for air to enter and exit the lungs.

Thoracic Cavity

The chamber of the body protected by the rib cage, containing the lungs and heart among other organs.