5

1. Which of the following statement is TRUE? I. The change in the basis correctly expresses the profit on a hedge. II. The basis moves toward zero through the contracts life.

   		Both I and II are true.
   		I
   		II
   		Both I and II are not true.

Question 10

1. Which of the following statement is TRUE? I. An individual who plans to take a foreign vacation could hedge the risk of converting into the foreign currency by buying foreign currency futures. II. A firm that expects to borrow in the future would use a short hedge thru Treasury bond futures to protect against interest rate changes.

   		II
   		Both I and II are true.
   		Both I and II are not true.
   		I