Which of the Following Is True of the Tailing of the Hedge

question 2

Multiple Choice

Which of the following is true of the tailing of the hedge?

• A)Long-dated obligations hedged with short-term forward agreements need to be tailed if the underlying commitment does not have a convenience yield.
• B)The degree of tail will have no influence on convenience yield as it makes the receipt of a commodity at a future date less risky compared to receiving it now.
• C)Long-dated obligations hedged with long-term forward agreements need to be tailed if the underlying commitment does not have a convenience yield.
• D)When hedging with futures,a greater degree of tailing is needed depending on the convenience yield earned.

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Definitions:

Freudian Psychology

A comprehensive theory of human nature that emphasizes the importance of the unconscious mind, developed by Sigmund Freud.

Positive Psychology

A field of psychology focused on the study of positive aspects of human life, such as happiness, well-being, and thriving.

William James

An American philosopher and psychologist, often referred to as the father of American psychology.

Wilhelm Wundt

Often regarded as the father of psychology, he established the first psychology laboratory at the University of Leipzig, Germany.