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.

Choose vivid and exact words to complete sentences.

Distinguish between specific and general statements in sentence construction.

Understand the concept of conciseness and clarity in written communication.

Recognize dynamic and evolving aspects in descriptions.

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Definitions:

Conscious Rational Processes

involve deliberate and logical thinking or problem-solving activities that are under direct awareness.

Thoughts

Mental processes involving the organization and understanding of information, including beliefs, opinions, and intentions.

Memories

The ability of the mind to store and recall information or experiences from the past.

Desires

Deep-seated wishes or cravings that drive behavior and influence decision-making.