Question: Which of the following is correct? To determine the optimal hedge ratio, one needs to use the correlation between the changes in the futures

Which of the following is correct? To determine the optimal hedge ratio,

Which of the following is correct? To determine the optimal hedge ratio, one needs to use the correlation between the changes in the futures price and the changes in the spot price of the asset underlying the futures contract. The optimal hedge ratio is always 1 if there is no asset mismatch None of the other statements is correct. The optimal hedge ratio is always 1 if changes in the spot price are perfectly correlated with changes in the futures price. More than one of the other statements is correct. O

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