When the Correlation Between Two Assets Is Exactly $- 1$ , Which of the Following Statements Is True?
A) the

question 3

Multiple Choice

When the correlation between two assets is exactly $- 1$ , which of the following statements is true?

• A) The hedge ratio is positive.
• B) The hedge ratio is zero.
• C) The variance of the hedged position is maximized.
• D) There is no basis risk in hedging.

Identify strategies to profit from or hedge against specific market movements.

Analyze the implications of option pricing and the profitability of certain strategies.

Compare and contrast protective mechanisms in investment portfolios.

Evaluate the financial and strategic differences between warrants and options.

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