1.

An optimal hedge ratio is one in which the change in the futures price equals the change in the spot price. Ture or False

2.

A firm that expects to borrow in the future would use a short hedge to protect against interest rate changes. Ture or False

3.

The minimum variance hedge ratio uses current information while the price sensitivity hedge ratio uses past information. Ture or False

4.

The price sensitivity hedge ratio would be more appropriate for interest rate futures hedges than for commodity futures hedges. Ture or False

5.

The risk of the basis is usually less than the risk of the spot position. Ture or False