In Regards to Hedging, Which of the Below Statements Is

question 19

Multiple Choice

In regards to hedging, which of the below statements is FALSE?

• A) Hedging is the employment of a futures transaction as a temporary substitute for a transaction in the cash market.
• B) As long as cash and futures prices move together, any loss realized on one position (whether cash or futures) will be offset by a profit on the other position.
• C) The hedge position locks in a value for the cash position.
• D) When the profit and loss are equal, the hedge is called an equal hedge.

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