In the presence of basis risk, is a one-for-one hedge, i.e., a hedge ratio of 1, always

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In the presence of basis risk, is a one-for-one hedge, i.e., a hedge ratio of 1, always better than not hedging at all?

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Derivatives Principles And Practice

ISBN: 9780078034732

2nd Edition

Authors: Rangarajan Sundaram

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Question Posted: Jan 10, 2024 01:00 AM

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In the presence of basis risk, is a one-for-one hedge, i.e., a hedge ratio of 1, always

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Basis risk arises from the fact that the hedge and the underlying spot values a...View the full answer

Derivatives Principles And Practice

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