Regarding the True Hedging Cost,if the Bid-Ask Spread Widens for More

question 32

Multiple Choice

Regarding the true hedging cost,if the bid-ask spread widens for more distant future contracts,the cost of forward hedging

• A) decreases with the maturity of the contract.
• B) remains constant with the maturity of the contract.
• C) increases with the maturity of the contract.
• D) has no direct relationship to the longer term.

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Definitions:

Dorsal Root

The sensory division of a spinal nerve, which enters the spinal cord and transmits sensory data from the peripheral nervous system to the central nervous system.

Spinal Nerve

A nerve that emerges from the spinal cord, carrying motor, sensory, and autonomic signals between the spinal cord and the body.

Ventral Root

The part of a spinal nerve that emerges from the anterior (ventral) part of the spinal cord, carrying motor information from the central nervous system to the muscles.

Median Nerve

A major nerve of the upper limb, running down the arm and forearm, involved in sensation and motor control of the hand.