A hedge of a specific stock's price with stock index futures will reduce both systematic and unsystematic risk.

Name: A hedge of a specific stock's price with stock index futures will reduce both systematic and unsystematic risk.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Hedging with stock index futures can reduce systematic risk, which is the risk associated with the overall market movements, but it does not reduce unsystematic risk, which is specific to an individual stock or sector.

A Hedge of a Specific Stock's Price with Stock Index