The Number of Future Contracts Needed to Hedge a Unit

question 32

True/False

The number of future contracts needed to hedge a unit of the spot assets is solely a function of the variance of the spot prices.

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Definitions:

Hybrid Vehicles

Cars that use a combination of an internal combustion engine and one or more electric motors for propulsion, aiming to achieve better fuel efficiency and lower emissions than conventional vehicles.

BCG Business Portfolio

A matrix developed by the Boston Consulting Group to help businesses analyze their product lines or business units for strategic decision-making based on market growth and market share.

Compound Annual Growth Rate

The mean annual growth rate of an investment over a specified time period longer than one year, expressing the compound growth of an investment.

Relative Market Share

A metric that compares a company’s market share to that of its largest competitor, indicating its competitive position in the market.