Which one of the following four statements about hedging is INCORRECT?

• A.A large number of hedge positions is generally required to match the underlying transaction completely.
• B.For a fully hedged portfolio, any changes in markets prices will typically produce significant changes in
  the market value of the portfolio.
• C.Traders can hedge their risks by taking an appropriate position in the underlying instrument.
• D.Traders can hedge their portfolio risks by taking a position in a different instrument.

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What are the add-on losses faced by a bank that is going bankrupt?
I. The discount accepted by the bank for selling its assets in a fire sale.
II. The increased cost of funding liabilities in a financially distressed situation.
III. The reduction in the present value of future growth opportunities.
IV. Loss of goodwill and intangible assets.

• A.II, III, IV
• B.III, IV
• C.I, II, III, IV.
• D.I, II

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