The Effectiveness of a Hedge Is Determined to What Degree

question 14

True/False

The effectiveness of a hedge is determined to what degree the change in spot asset's value is correlated with the equal change in the hedge asset's value to a change in the underlying spot exchange rate.

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Definitions:

Unpredictable

Lacking consistency or regularity, making outcomes or future events difficult to anticipate or forecast.

Aversive Stimuli

Stimuli that an organism seeks to avoid due to their unpleasant nature, often used in conditioning and behavioral studies.

Respondent Behavior

Behavior that occurs as an automatic response to a specific stimulus, often without conscious intention, as studied in classical conditioning.

Operant Behavior

Behavior that is controlled by its consequences, including rewards and punishments, in the context of operant conditioning.