Futures Mkt PRM

ameyakukde
Good Student
Posts: 29
Joined: Thu Aug 02, 2012 11:55 am

Futures Mkt PRM

Postby ameyakukde » Tue Apr 09, 2013 1:05 am

Which of the following statements is correct?
Choose one answer.
a. For hedging the short position in the underlying, appropriate position in the futures contract is long position
b. For hedging the long position in the underlying, appropriate position in the futures contract is short position
c. None of the above
d. For hedging the short position in the underlying, appropriate position in the futures contract is short position

vnraghuveer
Good Student
Posts: 20
Joined: Mon Apr 08, 2013 1:36 pm

Futures Mkt PRM

Postby vnraghuveer » Thu Apr 11, 2013 2:25 pm

Answer is D. because if a company is sure that it will sell an item in future, it should short a similar future contract to hedge the risk.


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