Question
'Hedging' in derivative markets is best described as:
Solution
- Hedging is a risk management strategy . The goal is not to make a profit, but to lock in a price or offset potential losses  from an existing or anticipated exposure in the cash (spot) market.
- Example: Â A farmer (long on crops) can sell futures contracts to lock in a sale price, hedging against a potential fall in crop prices. An importer (who will need USD in the future) can buy USD-INR futures to hedge against INR depreciation.
- Contrast:  Speculation  (option d) involves taking on risk to profit from price movements. Arbitrage  (option b) involves riskless profit from price discrepancies.
In each of the following questions, two statements numbered I and II are given. There may be cause and effect relationship between the two statements....
Statements:
I. Sports class have been made mandatory for all the standards.
II. Sports helps in both mental and physical fitness.
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Even...
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In the question, assuming the given statements to be true, find which of the conclusion (s) among given two conclusions is /are definitely true and the...
In the question below, two statements (I) and (II) are given. These statements may be either independent causes or may be effects of independent cause...
Event (A): More than 70 students went on a hunger strike for three days when they were barred from writing exams due to attendance shortage.
E...
What is the code for ‘done’?
Statements:
1. Several flights were delayed or canceled at the airport.
2. A dense fog enveloped the city for most of the day.
