Hedging Risk Ahead of the Brexit Referendum

The transcript discusses the impact of Brexit polls on market volatility, with the Leave campaign leading. It explores hedging strategies, such as buying volatility, and the potential market reactions if Brexit occurs. The influence of media endorsements, like The Sun's support for Brexit, is highlighted, along with the credibility issues of UK polls, referencing past inaccuracies in the Scottish referendum and UK general elections.

What was the effect of the UK's biggest selling newspaper endorsing Brexit?

• It pushed the pound to a two-month low.

• It caused the pound to rise significantly.

• It had no impact on the market.

• It led to a decrease in market volatility.

What is a potential strategy for hedging risk in the face of Brexit uncertainty?

• Holding cash only.

• Investing in real estate.

• Buying volatility.

• Selling all stocks immediately.

What challenge might market makers face the morning after a Brexit vote?

• A stable currency market.

• Increased liquidity in the market.

• Difficulty in gauging prices.

• A surge in stock prices.

How did the polls perform in predicting the outcome of the Scottish referendum?

• They predicted a win for the leave camp.

• They accurately predicted the outcome.

• They underestimated the margin of victory for the remain camp.

• They overestimated the margin of victory for the remain camp.

What was a notable error made by UK polls in recent years?

• Accurately predicting the outcome of the Brexit referendum.

• Overestimating the popularity of the Liberal Democrats.

• Predicting a win for the Labour party in the general election.

• Underestimating the Conservative party's victory margin.