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

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Definitions:

Variable-Interval Schedule

A reinforcement schedule in operant conditioning where a behavior is rewarded after an unpredictable amount of time has passed.

Behavioral Responses

Actions or reactions of an organism as a result of external or internal stimuli.

Collective Unconscious

A concept by Carl Jung referring to the part of the unconscious mind that is derived from ancestral memory and experience and is common to all humankind.

Operant Behavior

Behavior that is controlled by its consequences, in the context of operant conditioning, whereby reinforcements or punishments shape behavior patterns.