If Changes in Spot and Futures Prices Are Perfectly Correlated $+ 1$

question 25

Multiple Choice

If changes in spot and futures prices are perfectly correlated over the horizon of a hedge, then

• A) The minimum variance hedge ratio is \(+ 1\) .
• B) The variance of cash flows from a hedged position under the minimum-variance hedge ratio is zero.
• C) The net cash flow at maturity of the hedge is zero.
• D) The standard deviation of spot price changes must equal the standard deviation of futures price changes.

Understand the role of cognitive neuroscience in linking brain activity with mental processes.

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Definitions:

Carrying Cases

Containers or bags designed to protect and transport various items, often used for electronics, instruments, and equipment.

Direct Materials

Direct materials are the raw materials that can be directly associated with the production of goods, easily identifiable and quantifiable costs within the manufacturing process.

Product Cost

An accounting measure that includes all costs required to bring a product to market, specifically focusing on direct materials, direct labor, and overhead costs.

Assembler's Wages

Compensation paid to workers specifically engaged in assembling products during the manufacturing process.