Question: Question 26 it doesn't make sense to me QUESTION 26 Futures contracts, forwards contracts and options are common derivative instruments. (a) Describe futures and forward

Question 26 it doesn't make sense to me

QUESTION 26 Futures contracts, forwards contracts and options are common derivative instruments. (a) Describe futures and forward contracts and discuss how a hedger may utilise one of the two contracts, by providing an example? (6 marks) (b) Explain a put option and discuss how it could have been used by an investor to protect their share portfolio in a market downturn such as COVID-19, then describe one of the major advantages of using an option contract over forward and futures contracts in managing risk exposures. (4 marks)

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