Which of the Following Is a Reason for Hedging a Portfolio

question 12

Multiple Choice

Which of the following is a reason for hedging a portfolio with an index futures?

• A) The investor believes the stocks in the portfolio will perform better than the market but is uncertain about the future performance of the market
• B) The investor believes the stocks in the portfolio will perform better than the market and the market is expected to do well
• C) The portfolio is not well diversified and so its return is uncertain
• D) All of the above

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Definitions:

Antisocial Behavior

Behavior that either damages interpersonal relationships or is culturally undesirable

Rule Of Law

A principle that governs a society where laws are publicly promulgated, equally enforced, and independently adjudicated, and are consistent with international human rights principles.

Effective

Capable of producing intended or desired results, often used to describe techniques, policies, or actions that achieve their objectives efficiently.

Society

A group of individuals involved in persistent social interaction, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations.