17. The purpose of computing a minimum variance hedge ratio is to minimize the variance of the: (a) hedging instrument. (b) correlation estimator. (c) instrument to be hedged. (d) combined underlying and hedging instrument portfolio. 17

17. The purpose of computing a minimum variance hedge ratio is to minimize the variance of the: (a) hedging instrument. (b) correlation estimator. (c) instrument to be hedged. (d) combined underlying and hedging instrument portfolio. 17

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 5QTD

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Question

17. The purpose of computing a minimum variance hedge ratio is to minimize the variance of the:
(a) hedging instrument.
(b) correlation estimator.
(c) instrument to be hedged.
(d) combined underlying and hedging instrument portfolio.
7

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