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    Corporate Finance Study Set 8
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    Exam 25: Derivatives and Hedging Risk
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    Futures Market Transactions Are Used to Reduce Risk
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Futures Market Transactions Are Used to Reduce Risk

Question 1

Question 1

Multiple Choice

Futures market transactions are used to reduce risk.Risk may not be totally offset if:


A) the two instruments have different maturities.
B) payoff schedules of the two instruments are different.
C) the volatility of the two instruments are different.
D) the price movements are not perfectly correlated.
E) All of the above.

Correct Answer:

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