Which of the Following Statements Is True

question 48

Multiple Choice

Which of the following statements is true?

• A)Over-hedging will lead to a significant reduction in risk, but also in returns.
• B)In terms of risk and return, there is a linear relationship between an unhedged, a selectively hedged, a fully hedged and an over-hedged position.
• C)It is not possible to over-hedge a position.
• D)Over-hedging will lead to a significant reduction in risk, but also in returns, in terms of risk and return, there is a linear relationship between an unhedged, a selectively hedged, a fully hedged and an over-hedged position and it is not possible to over-hedge a position.

---

Definitions:

Iranian Revolution

A major political upheaval in Iran in 1979, which led to the overthrow of the Pahlavi dynasty under Shah Mohammad Reza Pahlavi and the establishment of an Islamic Republic under Ayatollah Khomeini.

Three Mile Island

The site of a nuclear power plant in Pennsylvania where a partial meltdown in 1979 resulted in the most serious accident in U.S. commercial nuclear power plant history.

Foreign Affairs

Pertains to matters concerning the relationships and interactions between countries, including diplomacy, international trade, and geopolitical strategy.

White Regimes

Governments or political systems historically established and maintained by white populations, often in regions where they were not the demographic majority, such as in South Africa under apartheid.