Which of the Following Would Be an Effective Hedge

question 77

Multiple Choice

Which of the following would be an effective hedge?

• A)Sell £7,500 forward at the 1-year forward rate, F₁($/£), that prevails at time zero.
• B)Buy £2,500 forward at the 1-year forward rate, F₁($/£), that prevails at time zero.
• C)Sell £25,000 forward at the 1-year forward rate, F₁($/£), that prevails at time zero.
• D)None of the above

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Definitions:

Helpful Hints

Advice or information given to assist someone in making decisions, solving problems, or understanding concepts more easily.

Nap

A short sleep, usually taken during the day.

Accurate Statement

A declaration that is true, factual, and reflects reality without errors or distortions.

Sleeping Pills

Medications used to facilitate falling asleep or staying asleep by those who struggle with insomnia or other sleep disorders.