If the Minimum-Variance Hedge Ratio Is $- 1$ ,Then Which of the Following Statements Is True?
A)Changes in of the Following

question 17

Multiple Choice

If the minimum-variance hedge ratio is $- 1$ ,then which of the following statements is true?

• A)Changes in spot and futures prices are perfectly negatively correlated.
• B)The standard deviations of spot and futures price changes are the same.
• C)The minimum-variance hedge for a long spot exposure is a short futures exposure of the same size.
• D)All of the above.

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Definitions:

Ego Ideal

A component of the personality comprising the standards and aspirations for behaviors that one strives to achieve.

Id

in Freudian psychoanalysis, it represents the part of the human psyche that is unconscious and contains the basic drives and instinctual desires.

Object Relations Theory

The psychodynamic theory that views the desire for relationships as the key motivating force in human behavior.

Psychoanalytic Theory

A theory of psychology that emphasizes unconscious processes and childhood experiences in shaping behavior and personality.