Which of the Following Is Not a Method Whereby a Hedge

question 38

Multiple Choice

Which of the following is not a method whereby a hedge is accomplished?

• A) Using derivative securities
• B) Owning several shares of a company's stock
• C) Buying or selling a forward contract
• D) Using an option in the cash market

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Definitions:

MBCA

Model Business Corporation Act, a template for state legislation that provides a statutory framework for the creation and operation of corporations within the United States.

Right of First Refusal

A contractual right that gives its holder the option to enter into a business transaction with the owner of something, before the owner is entitled to enter into that transaction with a third party.

Option Agreement

An agreement that gives a party the option, but not the obligation, to buy or sell an asset at a predetermined price and date.

Buy-and-Sell Agreement

A legally binding agreement between co-owners that outlines the procedure for the redistribution of shares of a departing owner, often used in partnerships and close corporations.