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Futures Market Transactions Are Commonly Used to Reduce Risk

Question 20

Multiple Choice

Futures market transactions are commonly used to reduce risk.The most risk reduction can be obtained when the asset at risk and the futures contract:


A) have different maturities.
B) have payoff schedules that differ.
C) have differing volatilities.
D) have uncorrelated price movements.
E) have perfectly correlated price movements.

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