Within the Futures Market, to Be Fully Hedged Means

question 31

Multiple Choice

Within the futures market, to be fully hedged means:

• A)Buying a sufficient number of futures contracts so that the loss of net worth on the FI's balance sheet when interest rates rise is just offset by the gain from the off-balance-sheet selling of futures when interest rates rise.
• B)Selling a sufficient number of futures contracts so that the loss of net worth on the FI's balance sheet when interest rates rise is just offset by the gain from the off-balance-sheet selling of futures when interest rates rise.
• C)Selling a sufficient number of futures contracts so that the gain of net worth on the FI's balance sheet when interest rates rise is just offset by the gain from the off-balance-sheet selling of futures when interest rates rise.
• D)None of the listed options are correct.

---

Definitions:

Consumers

Individuals or entities that purchase goods and services for personal use.

Widgets

A generic term for any hypothetical manufactured good used in economics or consumer studies.

Consumers

Individuals or entities that purchase goods or services for personal use and not for manufacturing or resale.

Widgets

A hypothetical or generic product often used in economic examples and problems to represent any type of good or service.