Which of the Following Is True of the Tailing of the Hedge

Multiple Choice

Which of the following is true of the tailing of the hedge?

A) Long-dated obligations hedged with short-term forward agreements need to be tailed if the underlying commitment does not have a convenience yield.
B) The degree of tail will have no influence on convenience yield as it makes the receipt of a commodity at a future date less risky compared to receiving it now.
C) Long-dated obligations hedged with long-term forward agreements need to be tailed if the underlying commitment does not have a convenience yield.
D) When hedging with futures,a greater degree of tailing is needed depending on the convenience yield earned.