Commodities can be categorized into storable and nonstorable. Which category, if any, should an analyst recommend as a hedge against inflation? A) Both storable and nonstorable commodities. B) Nonstorable commodities. C) Storable commodities.
C, Nonstorable are poor inflation hedge.
correct
An asset manager says he has perfectly hedged an equity portfolio that is denominated in a foreign currency by only using forward currency contracts. We know then that the: A) number of contracts used is equal to that used on a comparable equity position. B) number of contracts used is greater than that used on a comparable equity position. C) asset manager is not telling the truth.
C. You can hedge the principal, but you can’t know the growth or loss of the equity position to allow a “perfect hedge”.
Sponge_Bob_CFA Wrote: ------------------------------------------------------- > C. You can hedge the principal, but you can’t know > the growth or loss of the equity position to allow > a “perfect hedge”. +1
also the manager has only hedged the currency risk. to perfectly hedge the portfolio wouldn’t he have to hedge using forward intly equity index