Which of the Following Statements Is True

question 41

Multiple Choice

Which of the following statements is true?

• A)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called value risk.
• B)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called basis risk.
• C)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called gap risk.
• D)The mismatches between changes in the price of the exposure and the value of the instrument used to hedge the position is called fundamental risk.

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Definitions:

Nonlabor Income

Income received that does not originate from employment or work efforts, such as dividends, interest, or rental income.

Wage Rate

The amount of money that is paid to a worker per unit of time or per unit of output, often discussed in the context of labor markets.

Budget Equation

A mathematical representation of the constraint that the total value of goods and services a consumer can purchase is limited by their income.

Leisure

Free time not consumed by work or obligations, often used for relaxation, recreation, or other personal activities.