The Correlation Between Changes in Price of a Spot Asset

question 23

Multiple Choice

The correlation between changes in price of a spot asset and futures asset is 90%. The standard deviation of changes in spot prices is $2, and that of futures prices is $2.50. The hedge ratio that minimizes hedge variance is

• A) 0.70
• B) 0.72
• C) 0.80
• D) 0.85

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Definitions:

Subjective Signs

Symptoms reported by the patient but not objectively measurable or observable by others.

Pulmonic Area

The region of the chest overlying the lungs and heart where sounds from these organs can be auscultated.

Auscultation

Listening to the sounds of the body, typically using a stethoscope, for medical diagnosis.

Intercostal Space

The anatomical area between two ribs, which is significant in procedures like chest tube insertion to ensure proper placement without damaging the lungs.