The hedge ratio measures the impact that tailing-the-hedge will have on the number of contracts necessary to hedge the cash position.

Name: The hedge ratio measures the impact that tailing-the-hedge will have on the number of contracts necessary to hedge the cash position.
Brand: Quizplus
Rating: 5.0 (51 reviews)

Question

Quizplus · Accepted Answer

The hedge ratio is used to calculate the optimal number of futures contracts needed to hedge a cash position. It does not specifically measure the impact of tailing-the-hedge on the number of contracts necessary.

The Hedge Ratio Measures the Impact That Tailing-The-Hedge Will Have