A Hedge Ratio Can Be Computed as

question 31

Multiple Choice

A hedge ratio can be computed as

• A) profit derived from one futures position for a given change in the exchange rate divided by the change in value of the unprotected position for the same exchange rate.
• B) the change in value of the unprotected position for a given change in the exchange rate divided by the profit . derived from one futures position for the same exchange rate.
• C) profit derived from one futures position for a given change in the exchange rate plus the change in value of the unprotected position for the same exchange rate.
• D) the change in value of the unprotected position for a given change in the exchange rate plus by the profit derived from one futures position for the same exchange rate.

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Definitions:

Implied Warranty of Assignability

An assurance within the scope of the law that a contract can be transferred or assigned to another party.

Common Law

A legal system based on judicial decisions and precedent rather than statutory laws.

Warranties of Title

Legal guarantees provided by a seller that they have the right to sell the property and that there are no encumbrances against it.

Express Warranties

Explicit guarantees provided by a seller to a buyer, assuring certain quality or performance standards of the product or service.