Hedging in the Futures Markets Can Reduce All Risk If

question 40

Multiple Choice

Hedging in the futures markets can reduce all risk if:

• A)price movements in both the cash and futures markets are perfectly correlated.
• B)price movements in both the cash and futures markets have zero correlation.
• C)price movements in both the cash and futures markets are less than perfectly correlated.
• D)the hedge is a short hedge,but not a long hedge.
• E)the hedge is a long hedge,but not a short hedge.

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