Suppose That the Standard Deviation of Monthly Changes in the Price

question 1

Multiple Choice

Suppose that the standard deviation of monthly changes in the price of commodity A is $2.The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3.The correlation between the futures price and the commodity price is 0.9.What hedge ratio should be used when hedging a one month exposure to the price of commodity A?

• A) 0.60
• B) 0.67
• C) 1.45
• D) 0.90

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Definitions:

Premarital Relationships

Relationships between individuals who are engaged in a romantic connection but are not yet married.

Level Of Satisfaction

The degree to which one's expectations, desires, and needs are fulfilled or surpassed.

Expectation For Marriage

entails the beliefs and presumptions individuals have about marriage, including roles, responsibilities, and emotional connections, impacting marital satisfaction and longevity.

Altruistic

Exhibiting selfless concern for the well-being of others without expecting any reward or benefit in return.