A Hedge Ratio Can Be Computed as

question 25

Multiple Choice

A hedge ratio can be computed as

• A) profit derived from one futures position for a given change in the exchange rate divided by the change in value of the unprotected position for the same exchange rate.
• B) the change in value of the unprotected position for a given change in the exchange rate divided by the profit derived from one futures position for the same exchange rate.
• C) profit derived from one futures position for a given change in the exchange rate plus the change in value of the unprotected position for the same exchange rate.
• D) the change in value of the unprotected position for a given change in the exchange rate plus by the profit derived from one futures position for the same exchange rate.

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Definitions:

Passive Margin

The shift from oceanic to continental lithosphere which isn't located at an active plate margin.

Continental Margin

The zone of the ocean floor that separates the thin oceanic crust from thick continental crust, including the continental shelf, slope, and rise.

Plate Boundary

The edges where two tectonic plates meet, which can be divergent, convergent, or transform, leading to various geological features and events.

Normal Faults

Fractures in the Earth's crust where the rock above the fault plane has moved down relative to the rock below.