Which of the Following Would Be an Effective Hedge?
A)Sell $\le$

question 61

Multiple Choice

Which of the following would be an effective hedge?

• A)Sell \(\le\)2,278.13 forward at the 1-year forward rate, F₁($/\(\le\)), that prevails at time zero.
• B)Buy \(\le\)2,500 forward at the 1-year forward rate, F₁($/\(\le\)), that prevails at time zero.
• C)Sell \(\le\)25,000 forward at the 1-year forward rate, F₁($/\(\le\)), that prevails at time zero.
• D)None of the above

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Definitions:

Dependent Variable

A variable whose value is influenced or determined by one or more independent variables in an experiment or analysis.

Independent Variable

A variable in an experiment or model that is manipulated or changed to observe its effects on the dependent variable.

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