Hedging Is Accomplished by Holding Contracts or Securities Whose Payoffs

question 37

True/False

Hedging is accomplished by holding contracts or securities whose payoffs are positively correlated with some risk exposure that already exists.

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Definitions:

Area

The amount of space inside a two-dimensional region, such as a floor; area is measured in square units; the living space in a property.

Diagonals

Straight lines connecting two non-adjacent vertices in a polygon or polyhedron.

Rectangle

A quadrilateral with four right angles and two pairs of parallel and equal sides.

Deck

In construction, a flat surface capable of supporting weight, similar to a floor, but typically constructed outdoors and often connected to a building.