Unlike Hedging with Futures, Hedging with Options

question 15

Multiple Choice

Unlike hedging with futures, hedging with options

• A) locks in a particular price or rate of return for a hedger.
• B) exposes a hedger to a risk of large losses.
• C) allows a hedger to benefit from the upside potential of his spot position.
• D) is free (i.e., creating the hedge is costless)
• E) both b and c

---

Definitions:

Technician

A skilled professional specialized in the technical aspects of maintenance, repair, and operation of machinery or technology.

Straightedge

A tool used for checking the flatness of surfaces or as a guide for drawing or cutting straight lines.

Feeler Gauge

A tool made of thin metal strips of varying thicknesses used to measure gap widths, such as in spark plug gaps.

Clearances

The space or gap between two parts, typically measured to ensure proper fit, alignment, or function.