Inflation Is a General Rise in Prices with a Corresponding

question 48

True/False

Inflation is a general rise in prices with a corresponding increase in wages,which results in decreased purchasing power.

---

Definitions:

Option Contract

A financial contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.

Derivative Security

A financial instrument whose value is based on the value of another asset.

Economic Exposure

Long-term financial risk arising from permanent changes in prices or other economic fundamentals.

Cross-Hedging

Hedging an asset with contracts written on a closely related, but not identical, asset.