22-61 Which of the Following Indicates the Need to Place

question 47

Multiple Choice

22-61 Which of the following indicates the need to place a hedge?

• A)The price movement in the underlying cash asset can not be forecasted perfectly.
• B)The prices of the assets or liabilities are imperfectly correlated over time with the prices on the futures.
• C)Basis risk prevents the minimum risk of the portfolio from reaching zero.
• D)Treasury has been issuing more shorter-dated bonds to finance U.S.budge deficits.
• E)Spot bonds and futures on bonds are traded in different markets.

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Definitions:

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