Within the Futures Market, to Be Fully Hedged Means

question 31

Multiple Choice

Within the futures market, to be fully hedged means:

• A)Buying a sufficient number of futures contracts so that the loss of net worth on the FI's balance sheet when interest rates rise is just offset by the gain from the off-balance-sheet selling of futures when interest rates rise.
• B)Selling a sufficient number of futures contracts so that the loss of net worth on the FI's balance sheet when interest rates rise is just offset by the gain from the off-balance-sheet selling of futures when interest rates rise.
• C)Selling a sufficient number of futures contracts so that the gain of net worth on the FI's balance sheet when interest rates rise is just offset by the gain from the off-balance-sheet selling of futures when interest rates rise.
• D)None of the listed options are correct.

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Definitions:

Performance Efficiency

Measures how well an individual, group, or organization uses resources to achieve objectives with minimum waste.

Social Networking

The use of dedicated websites and applications to interact with other users, or to find people with similar interests to oneself.

Career Advancement

The process of moving up in the hierarchy of an organization or field, often accompanied by increased responsibilities and compensation.

Resource Costs

The financial expenditure associated with the acquisition, maintenance, and utilization of resources such as materials, labor, and capital.