When the Net Profit on Both the Futures and Cash

question 24

Multiple Choice

When the net profit on both the futures and cash position equals zero, this is known as a(n) :

• A) cross hedge.
• B) perfect hedge.
• C) imperfect hedge.
• D) basis hedge.
• E) return hedge.

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Definitions:

Voucher System

A set of procedures for authorizing and recording liabilities and cash payments.

Internal Control

Procedures and policies implemented by a company to safeguard its assets, ensure accurate financial reporting, and promote operational efficiency.

Cash Payments

Transactions in which payment for goods or services is made with cash at the time of purchase.

Voucher

A special form for recording relevant data about a liability and the details of its payment.