EBK THE ECONOMICS OF MONEY, BANKING AND
EBK THE ECONOMICS OF MONEY, BANKING AND
4th Edition
ISBN: 9780100668201
Author: Mishkin
Publisher: YUZU
Question
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Chapter 14, Problem 1Q
To determine

The advantages and disadvantages of using forward contracts to hedge

Context Introduction:

Forward contracts − Customized contracts that take place between parties for selling or buying an asset in a future time at the preset price is called forward contract.

Hedge − To lower the risks of unfavorable movements in prices of assets, the investment that is made is a hedge.

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