Futures Provide a More Efficient Hedge Than Options, in That

question 7

True/False

Futures provide a more efficient hedge than options, in that gains and losses can be more fully offset by futures contracts.

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Definitions:

Fair Value

The estimated price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Book Value

The net value of a company's assets minus its liabilities, often used as a measure of the company's worth on its balance sheet.

Partial Equity Method

An accounting approach where an investor recognizes income from an investee to the extent of dividends received and changes in the investee's equity.

Consolidated Net Income

The total net earnings of a parent company and its subsidiaries after eliminating inter-company transactions and distributions.