Which of the Following Statements Is True

question 48

Multiple Choice

Which of the following statements is true?

• A)Over-hedging will lead to a significant reduction in risk, but also in returns.
• B)In terms of risk and return, there is a linear relationship between an unhedged, a selectively hedged, a fully hedged and an over-hedged position.
• C)It is not possible to over-hedge a position.
• D)Over-hedging will lead to a significant reduction in risk, but also in returns, in terms of risk and return, there is a linear relationship between an unhedged, a selectively hedged, a fully hedged and an over-hedged position and it is not possible to over-hedge a position.

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Definitions:

Jog Circuit

A control circuit method used to momentarily energize a motor or device, allowing for short movements or adjustments without continuous operation.

Jog Function

A control feature that enables a brief activation of a motor to adjust its position without initiating a full start cycle.

Control Circuit

An electrical circuit designed to control the operation of devices in a system, often using low power signals to operate switches or relays controlling higher power circuits.