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Which of the Following Statements Is/are Correct About the Reasons

question 30

Multiple Choice

Which of the following statements is/are correct about the reasons why hedging is difficult to do perfectly?
I.Available futures contract sizes may not match the hedging needs of the firm.
II.There may be a change in the relationship between the futures price and the local spot price.


Definitions:

Investor Model

A framework or plan that outlines how investors can fund businesses or projects expecting profitability.

Crowdfunders

Individuals who financially support projects, causes, or businesses through crowdfunding platforms, often in exchange for rewards, equity, or nothing at all.

Equity

Ownership interest in a company or property, representing a share of the value after debts are subtracted.

Manufacture Prototypes

The process of creating early models or samples of a product to test its functionality, design, and feasibility.

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