When the Correlation Between Two Assets Is Exactly $- 1$ ,Which of the Following Statements Is True?
A)The Hedge Ratio

question 12

Multiple Choice

When the correlation between two assets is exactly $- 1$ ,which of the following statements is true?

• A)The hedge ratio is positive.
• B)The hedge ratio is zero.
• C)The variance of the hedged position is maximized.
• D)There is no basis risk in hedging.

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