It Is Difficult to Construct a Perfectly Hedged Financial Plan

question 76

Multiple Choice

It is difficult to construct a perfectly hedged financial plan because

• A) it is difficult to determine which part of assets is temporary and which part is permanent.
• B) exact timing of asset liquidation is difficult.
• C) never sure how much short or long-term financing is available at a given time.
• D) all of the other answers are correct

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Definitions:

Market Value

The cost at which you can currently buy or sell a service or asset in the open market.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which may not necessarily reflect its market value.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of the company remains the same.

Market Value

The market price at which an asset or service can be transacted currently.