Question: When will the estimated hedge ratio be greater than one? a. When spot rate changes are greater than futures rate changes. b. When basis risk

When will the estimated hedge ratio be greater than one?

a.

When spot rate changes are greater than futures rate changes.

b.

When basis risk is absent.

c.

When spot rate changes are equally sensitive as futures price changes over time.

d.

When spot rate changes are less sensitive to the changes in the economy over time.

e.

When the spot and future exchange rates are expected to move perfectly together.

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