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Discuss how each of the following can be used to hedge a forward market exposure : (a) Derivative contracts such as - deliverable forward contracts
Discuss how each of the following can be used to hedge a forward market exposure:
(a) Derivative contracts such as
- deliverable forward contracts
- non-deliverable forward contracts
- futures contracts
- swaps
- option contracts
(b) direct borrowing and lending
(c) repurchase agreements
Hint: refer to the following reading:
Steve Allen (2013) "Financial Risk Management: A Practitioner's Guide to Managing Market and Credit Risk", John Wiley & Sons Chapter 10 Managing Forward Risk
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