Based on the Price Sensitivity Hedge Ratio,if the Modified Duration

question 43

True/False

Based on the price sensitivity hedge ratio,if the modified duration of the futures contract increases (assumed to be positive),then the optimal number of futures contracts increases.Assume the durations are positive.

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Definitions:

FIFO Method

"First In, First Out," an inventory valuation method where the oldest stock is sold first, assuming that goods are sold in the order they were acquired.

Conversion Costs

The sum of labor and overhead costs required to convert raw materials into finished goods.

Equivalent Units

A method to express the amount of work done on partially completed goods in terms of fully completed units.

FIFO Method

An inventory valuation method that assumes items bought or manufactured first are sold first, standing for "First In, First Out."