Futures Provide a More Efficient Hedge Than Options, in That

question 7

True/False

Futures provide a more efficient hedge than options, in that gains and losses can be more fully offset by futures contracts.

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Definitions:

Categorization

The process by which ideas and objects are recognized, differentiated, and understood.

Spreading Activation

A model of how information is retrieved in the brain, suggesting that spreading activation from one concept in a network triggers the retrieval of related concepts.

Discriminative Stimulus

A stimulus in the presence of which a particular response is reinforced, helping to differentiate it from other stimuli where the response would not be reinforced.

Operant Conditioning

A learning process in which the likelihood of a behavior is increased or decreased through reinforcement or punishment.