In Cross-Hedging, If the Futures Contract Value Is ____ Volatile

question 36

Multiple Choice

In cross-hedging, if the futures contract value is ____ volatile than the portfolio value, hedging will require a ____ amount of principal represented by the futures contracts.

• A)less; greater
• B)more; greater
• C)more; smaller
• D)none of the above

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Definitions:

Volcanic Mudflow

A rapid flow of volcanic ash mixed with water, often melting snow or glaciers, that moves down the slopes of a volcano, also known as a lahar.

Pyroclastic Column

A vertical column of volcanic ash and gas ejected into the atmosphere during an explosive volcanic eruption.

Fissure Eruption

A volcanic eruption that occurs when magma rises through and erupts onto the surface in a long fissure.

Lava Fountain

A fountain of molten lava propelled into the air by pressure and escaping gases.