If the Minimum-Variance Hedge Ratio Is $- 1$ , Then Which of the Following Statements Is True?
A)

question 13

Multiple Choice

If the minimum-variance hedge ratio is $- 1$ , then which of the following statements is true?

• A) Changes in spot and futures prices are perfectly negatively correlated.
• B) The standard deviations of spot and futures price changes are the same.
• C) The minimum-variance hedge for a long spot exposure is a short futures exposure of the same size.
• D) All of the above.

---

Definitions:

Workplace

The physical or virtual location where individuals perform their job duties and collaborate with colleagues.

Manager

An individual responsible for directing and overseeing the work of a group or segment of an organization, often involved in planning, organizing, leading, and controlling resources.

Ratio

A mathematical expression that represents the relationship in quantity, degree, or size between two similar things, often expressed as "a to b" or a/b.

Negative Emotions

Negative emotions refer to feelings that are generally considered to be unpleasant for individuals, such as sadness, anger, and fear, which can impact mental health and interpersonal relationships.