FIN MCQ FIN402 Chapter 11 Though a cross hedge has somewhat higher risk than an ordinary hedge, it will reduce risk if which of the following occurs?

Though a cross hedge has somewhat higher risk than an ordinary hedge, it will reduce risk if which of the following occurs?

FIN402 Chapter 11

Though a cross hedge has somewhat higher risk than an ordinary hedge, it will reduce risk if which of the following occurs?

a. futures prices are more volatile than spot prices
b. the spot and futures contracts are correctly priced at the onset
c. spot and futures prices are positively correlated
d. futures prices are less volatile than spot prices
e. none of the above

Answer: C

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FIN MCQ

Though a cross hedge has somewhat higher risk than an ordinary hedge, it will reduce risk if which of the following occurs?

Though a cross hedge has somewhat higher risk than an ordinary hedge, it will reduce risk if which of the following occurs?

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