Suppose That the Variance of Quarterly Changes in the Spot

question 2

Multiple Choice

Suppose that the variance of quarterly changes in the spot prices of a commodity is 0.49,the variance of quarterly changes in a futures price on the commodity is 0.81,and the coefficient of correlation between the two changes is 0.6.The optimal hedge ratio for the contract is:

• A) 0.10
• B) 0.4667
• C) 0.5444
• D) 0.9
• E) None of these answers are correct.

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Definitions:

SAM

Stands for Serviceable Available Market, which is the portion of the Total Available Market (TAM) that can be served by a company's products or services.

SOM

An abbreviation that can refer to various concepts, depending on the context; one example is "Self-Organizing Map," a type of artificial neural network.

SOM

The subset of the Serviceable Available Market that an organization can expect to reach, considering factors like competition and market readiness.

SAM

An abbreviation for Serviceable Available Market, which is the portion of the Total Available Market that can actually be reached by a company.