Which of the Following About Hedging Is Incorrect

question 46

Multiple Choice

Which of the following about hedging is incorrect?

• A) With the Australian future market an investor will have to use a 90-day bank-accepted-bill to hedge commercial paper.
• B) In the Australian futures market a borrower will have to use 3-year Treasury bond futures to hedge a loan facility with a term to maturity of 3 to 5 years.
• C) A borrower will have to use a 10-year Treasury bond future to hedge an issue of long-term debentures.
• D) When prices of 3-year Treasury bond futures varies over time with the prices of long-term debentures this is called spread-commodity hedging.

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Definitions:

Accounting

is the systematic recording, reporting, and analysis of financial transactions of a business or individual.

Dividend Income

Income received from owning shares in a company, which is often taxable at different rates than regular income.

Distribution

The action of sharing something out among a number of recipients, often used in the context of financial assets or dividends.

Transferors Own 80%

A situation in a business transaction where the original owners or transferors retain an 80% ownership interest in the property or entity after the transaction is completed.