Which of the Following Statements Is True

question 62

Multiple Choice

Which of the following statements is true?

• A)Using a futures or forward contract to hedge a specific asset or liability risk is called macrohedging.
• B)Using a futures or forward contract to hedge a specific asset or liability risk is called microhedging.
• C)Using a futures or forward contract to hedge a specific asset or liability risk is called asset- or liability-specific hedging.
• D)Using a futures or forward contract to hedge a specific asset or liability risk is called naïve hedging.

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Definitions:

Monthly Payment

An amount that is paid every month, typically in the context of loan repayments or rent.

Annual Subscription

A payment or fee paid once a year for membership or access to a service or product.

Registered Retirement Income Fund

A type of retirement plan under Canadian law that provides individuals with a method to receive income from the assets within their Registered Retirement Savings Plan (RRSP) in retirement.

Compounded Monthly

Interest calculated on the initial principal and the accumulated interest every month.