When Calculating the Number of Hedges Required for a Position

question 54

True/False

When calculating the number of hedges required for a position, the number should always be rounded up to cover the full position.

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Definitions:

Expected Market Return

The average return anticipated from an investment in the broader market, serving as a benchmark for evaluating investment performance.

Beta

A measure of a stock's volatility in comparison to the market as a whole.

Risk Premium

The additional return required by an investor for tolerating a higher level of risk compared to a safe investment.

Market Risk

The possibility for investors to experience losses due to factors that affect the overall performance of the financial markets.