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In contrast, futures contracts, with their liquidity and transparent pricing, provide an efficient means for traders and investors to hedge against market fluctuations. The requirement
In contrast, futures contracts, with their liquidity and transparent pricing, provide an efficient means for traders and investors to hedge against market fluctuations. The requirement for margin deposits and the associated counterparty risk are notable drawbacks. Your example of a hedge fund using futures contracts to hedge against euro depreciation demonstrates a strategic application of these instruments in portfolio management.Given these differences, do you think one type of contract is generally preferable over the other, or does it largely depend on the specific circumstances and goals of the entity involved?
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Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
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