Which of the Following Is a Reason for Hedging a Portfolio

question 12

Multiple Choice

Which of the following is a reason for hedging a portfolio with an index futures?

• A) The investor believes the stocks in the portfolio will perform better than the market but is uncertain about the future performance of the market
• B) The investor believes the stocks in the portfolio will perform better than the market and the market is expected to do well
• C) The portfolio is not well diversified and so its return is uncertain
• D) All of the above

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Definitions:

Morality

Principles concerning the distinction between right and wrong or good and bad behavior.

Deontology

An ethical theory that suggests actions are morally right or wrong based on a set of rules, rather than the consequences of the actions.

Ethical Issue

A problem or situation that requires a person or organization to choose between alternatives considered either right (ethical) or wrong (unethical).

Framework For Ethics

A structured set of guidelines or principles designed to help individuals or organizations make ethical decisions.