Where the Hedge Arrangement Completely Eliminates the Consequences of Adverse

question 17

Multiple Choice

Where the hedge arrangement completely eliminates the consequences of adverse exchange-rate fluctuations,the purchase or sales arrangement is considered to be:

• A) partially hedged.
• B) positively hedged.
• C) perfectly hedged.
• D) negatively hedged.

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Definitions:

Forecasting Ability

The capability to predict future trends, prices, or outcomes based on historical data, trends, and analysis.

Tracking Error

The difference between the return on a managed portfolio and that of a benchmark portfolio against which the manager is evaluated.

Benchmark Return

The standard against which the performance of a security, mutual fund, or investment manager can be measured.

Passive Portfolio

An investment strategy that seeks to replicate and hold a market index or benchmarks, typically requiring less frequent trading and lower fees.