What are the limitations of the use of forward contracts to construct a hedge against price risk?

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What are the limitations of the use of forward contracts to construct a hedge against price risk? How does a futures exchange control for these limitations?

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Financial Management Principles and Applications

ISBN: 978-0134417219

13th edition

Authors: Sheridan Titman, Arthur J. Keown, John H. Martin

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Question Posted: Apr 24, 2017 10:35 AM

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What are the limitations of the use of forward contracts to construct a hedge against price risk?

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G e n e r a l l y f o r w a r d c ont r ac ts a r e n e g oti a t e d lo n g t er m c ont r a c ts b e tw e e n the f i r m m a n a g ing its r isk e ...View the full answer

Financial Management Principles and Applications

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