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Part B (3 marks) Which of the following instruments is least likely to perfectly hedge the risk of an initial position? Briefly explain your choice,
Part B (3 marks) Which of the following instruments is least likely to perfectly hedge the risk of an initial position? Briefly explain your choice, assuming that an investor can take a long or short position in the following instruments. a. An instrument with 100% positive correlation to the initial position. b. An instrument with 100% negative correlation to the initial position. c. An instrument with 80% negative correlation to the initial position
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