The Two Basic Types of Hedges Involving the Futures Market

question 5

True/False

The two basic types of hedges involving the futures market are long hedges and short hedges, where the words "long" and "short" refer to the maturity of the hedging instrument.For example, a long hedge might use Treasury bonds, while a short hedge might use 3-month T-bills.

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Definitions:

Cognitive Dissonance

The discomfort in one's mind arising from the coexistence of opposing beliefs, ideas, or values.

Physical Arousal

The physiological response of the body to stimuli, evident in signs such as increased heart rate, sweating, or rapid breathing.

Inner Awareness

Inner awareness is the subjective experience of one's thoughts, feelings, and sensations; an introspective attention to one's internal state.

Kin Selection Hypothesis

A theory in evolutionary biology suggesting that behaviors that help a genetic relative are favored by natural selection.