1. Under what circumstances are (a) a short hedge and (b) a long hedge appropriate? 2....

1. Under what circumstances are (a) a short hedge and (b) a long hedge appropriate?

2. Explain what is meant by basis risk when futures contracts are used for hedging.

3. Explain what is meant by a perfect hedge. Does a perfect hedge always lead to a betteroutcome than an imperfect hedge? Explain your answer.

4. Give three reasons why the treasurer of a company might not hedge the company’sexposure to a particular risk

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jeff jeffy answered 2 years ago

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1. Under what circumstances are (a) a short hedge and (b) a long hedge appropriate? 2....

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