If you can create a perfect hedge, then you:
A) Are guaranteed to profit if interest rates rise.
B) Are guaranteed to profit if prices rise.
C) Risk losing your profit if prices fall.
D) Risk losing your profit if interest rates fall.
E) Will not profit nor lose if prices rise.

Question

Quizplus · Accepted Answer

A perfect hedge is designed to eliminate the risk of loss due to price movements, meaning that you neither profit nor lose if prices change.

If You Can Create a Perfect Hedge, Then You