An Equity Portfolio Manager Can Neutralize the Risk of Falling

Multiple Choice

An equity portfolio manager can neutralize the risk of falling stock prices by entering into a hedge position where the payoffs are

A) not correlated with the existing exposure.
B) positively correlated with the existing exposure.
C) negatively correlated with the existing exposure.
D) at breakeven with the existing exposure.
E) imperfectly correlated with the existing exposure.