1. Walmart financial statement shows that Walmart only hedges Japanese Yen and British Pound (instead of over 100 foreign currencies). Which of the following best describes Walmart's hedging strategy?
a) hedging with invoice currency
b) cross hedging or exposure netting
c) hedging via lead and lag
d) hedging with options
2. Macro events only are reflected in the performance of the market portfolio because:
A) The market portfolio contains only risk-free securities
B) Only macro events are tracked by economists
C) The unique risks have been diversified away
D) The firm-specific events would be too numerous to quantify