Question: What is risk- minimizing hedging? Briefly outline how you would set up a risk-minimizing hedge. Is a risk- minimizing hedge a perfect or imperfect hedge?

What is risk- minimizing hedging? Briefly outline how you would set up a risk-minimizing hedge. Is a risk- minimizing hedge a perfect or imperfect hedge? Explain your answer.

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Consider hedging a long spot position by shorting futures contracts Risk minimization hedging is using a statistical model assuming that past price pa... View full answer

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