Which of the Following Would Be an Effective Hedge

question 80

Multiple Choice

Which of the following would be an effective hedge?

• A)Sell £2,500 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:

Muscular

Having well-developed muscles, often as a result of physical exercise.

Cardiorespiratory Fitness

The ability of the heart, lungs, and vascular system to supply oxygen to working muscles during sustained physical activity.

Principle Of

A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.

Health-Related Fitness

A state of physical well-being that includes muscular strength, endurance, flexibility, and a healthy body composition.