The Covariance of the Change in Spot Exchange Rates and the Change

question 68

Multiple Choice

The covariance of the change in spot exchange rates and the change in futures exchange rates is 0.6606, and the variance of the change in futures exchange rates is 0.6060.The variance of the change in spot exchange rates is 0.9090.What is the degree of hedging effectiveness?

• A)0.61.
• B)0.90.
• C)0.87.
• D)0.82.
• E)0.79.

---

Definitions:

Spanish Missions

Religious and military outposts established by Spanish Catholics during the colonial period, primarily in the Americas, aimed at converting Indigenous peoples to Christianity and extending Spanish territory.

Father Junipero Serra

A Roman Catholic priest and missionary who founded several missions in what is now California during the late 18th century.

Native Populations

Indigenous peoples who were the original inhabitants of a territory before colonization or annexation by foreign powers.

Spanish Empire

A historical empire that, at its height in the 16th and 17th centuries, included territories in Europe, the Americas, Asia, and Africa, known for its extensive conquests and colonial rule.