If the minimum-variance hedge ratio is +1, then which of the following is true?
A) There is no basis risk.
B) The variance of the hedged cash flows is zero.
C) Both (a) and (b) must be true.
D) Neither (a) nor (b) is necessarily true.

Question

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The Answer of If the minimum-variance hedge ratio is +1, then which of the following is true?
A) There is no basis risk.
B) The variance of the hedged cash flows is zero.
C) Both (a) and (b) must be true.
D) Neither (a) nor (b) is necessarily true.

If the Minimum-Variance Hedge Ratio Is +1, Then Which of the Following