A Firm Owns an Asset a and It Wants to Hedge

Multiple Choice

A firm owns an asset A and it wants to hedge against changes in the value of A by making an offsetting sale of asset B. The firm minimizes risk by

A) selling the same number of units of B as assets of A.
B) selling hedge ratio (delta) number of units of B.
C) selling the reciprocal of hedge ratio number of units of B.
D) buying the same number of units of B as assets of A.