Which of the following is true?
A. The optimal hedge ratio is the slope of the best fit line when the spot price (on the y-axis) is regressed against the futures price (on the x-axis).
B. The optimal hedge ratio is the slope of the best fit line when the futures price (on the y-axis) is regressed against the spot price (on the x-axis).
C. The optimal hedge ratio is the slope of the best fit line when the change in the spot price (on the y-axis) is regressed against the change in the futures price (on the x-axis).
D. The optimal hedge ratio is the slope of the best fit line when the change in the futures price (on the y-axis) is regressed against the change in the spot price (on the x-axis).
C
The optimal hedge ratio reflects the ratio of movements in the spot price to movements in the futures price.
You might also like to view...
Activity-based management focuses on identifying product costs as either value-adding or nonvalue-adding activities
Indicate whether the statement is true or false
z is a standard normal random variable. The P(-1.96 
z
1.4) equals
A. 0.9442. B. 0.0558. C. 0.8942. D. 0.1058.
Which two elements that form our attitudes are represented with these two statements and why?
I love to eat hamburgers and french fries for lunch. I am going to eat a hamburger and french-fries for lunch. What will be an ideal response?
Discuss how an owner of intellectual property protects those rights in other countries