A Cross Hedge Often Has Greater Risk Then a Perfect

question 19

Multiple Choice

A cross hedge often has greater risk then a perfect hedge because:

• A)futures and cash interest rates are perfectly positively correlated.
• B)futures and cash interest rates are perfectly negatively correlated.
• C)cross hedging uses a contract based on the identical underlying asset.
• D)futures and cash interest rates may not move together.
• E)b.and d.

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Definitions:

Microvilli

Tiny hair-like structures on the surface of some cells that increase surface area for absorption or secretion.

Rugae

The folds or ridges found on the internal surface of the stomach, which allow it to expand as needed.

Hepatic Lobule

The functional unit of the liver, consisting of a hexagonal structure that processes nutrients, detoxifies harmful substances, and produces bile.

Portal Triad

A distinctive arrangement within the liver consisting of a bile duct, a branch of the hepatic artery, and a branch of the hepatic portal vein, essential for liver function.