Question: If one cannot create a perfect hedge, what are the alternatives? Give an example to explain your answer.

If one cannot create a perfect hedge, what are the alternatives? Give an example to explain your answer.

Step by Step Solution

3.36 Rating (177 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

A perfect hedge cannot be set up when 1 a futures contract does not trade on the commodity being hedged 2 even if a futures contract trades on the commodity being hedged date of maturity or contract s... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

646-B-B-F-M (2806).docx

120 KBs Word File

Students Have Also Explored These Related Banking Questions!