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andrew11 [14]
3 years ago
8

Hedging transactions in an active future market have zero. A. True B. False

Business
1 answer:
Evgen [1.6K]3 years ago
7 0

Answer:

A. True

Explanation:

Hedging transactions can be described as derivative that are purchased in order to reduce investment risk of investments by using options, futures or forward contracts as insurance.

A futures market refers to a central financial exchange where standardized futures contracts are bought and sole as defined by the exchange.

Generally, positive net present value (NPV) is yielded by hedging. But the NPV will be zero or even slightly negative as when the market becomes active about the future.

Based on this explanation, the correct option is <u>A. True</u>. That is, hedging transactions in an active future market have zero.

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