FAS 133 Defines Effective Hedging as

question 13

Multiple Choice

FAS 133 defines effective hedging as

• A)a hedge with no basis risk
• B)a correctly priced hedge
• C)a perfect hedge
• D)a hedge that reduces 80 to 125 percent of the risk
• E)none of the above

---

Definitions:

Concrete

Referring to real, tangible objects or phenomena, as opposed to abstract concepts or ideas.

Genus

A category of biological classification that ranks above species and below family, used to group species that share common characteristics.

Species

A group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding, and are classified under a common and distinct category in biology.

Concrete

Pertaining to actual things or instances, rather than abstract qualities, ideas, or theories.