Which of the Following Statements Is True

question 41

Multiple Choice

Which of the following statements is true?

• A)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called value risk.
• B)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called basis risk.
• C)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called gap risk.
• D)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called fundamental risk.

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Definitions:

External

Originating from or situated on the outside of an entity, not inherent or contained within it.

Stable

Characterized by consistency, reliability, and resistance to change or disorder.

Unstable

Characterized by a lack of stability, unpredictability, or being prone to sudden change.

Goal-Related Thinking

is the cognitive process involved in setting, pursuing, and achieving personal objectives.