The Price Sensitivity Rule

question 23

Multiple Choice

The price sensitivity rule

• A) determines the number of futures contracts to trade.
• B) states that a hedging futures position must have the same sensitivity to interest rate changes as the asset or portfolio whose value is being hedged.
• C) requires determining the relative price variability of a futures contract and underlying assets given a change in interest rates.
• D) all of the above.

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Definitions:

Implicit Memory

Memory that influences thoughts and behaviors without conscious awareness, such as procedural memory for tasks.

Explicit Memory

A type of long-term memory involving conscious recollection of factual information, previous experiences, and concepts.

Declarative Memory

The type of long-term memory that involves the capacity to consciously recall facts, knowledge, and experiences.

Short-term Memory Span

The ability to retain a limited amount of data in an immediately accessible form for a brief duration.