Which of the following would be considered a short hedge?
Long the commodity and short the futures
b) Short the commodity and long the futures
c) Long the commodity and long the futures
d) Short the commodity and short the futures
The correct answer is a) Long the commodity and short the futures.
short hedge or selling hedge is when you are long
the commodity (cash commodity) and short the futures
contract on that commodity. A buying or long hedge
would be shorting the commodity and buying the futures.
© 2004 American Investment Training, Inc.
Find out more about commodity spot and futures prices, how to calculate a commodity's futures price, and the differences ...
Find out more about commodity spot and futures prices, how to calculate commodity futures prices and how spot prices indicate ...
Find out how mark to market accounting originated and how it has been forced to evolve to eliminate subjectivity from financial ...
Understand why mark to market accounting has been a major point of controversy because it requires all assets to be valued ...
A transaction that can cancel out a forward contract that has ...
The security that is delivered by the short position holder in ...
A financial instrument whose value is based on the value of another ...
A trading strategy in which an investor buys a long position ...
A standard agreement used in over-the-counter derivatives transactions.
A combination of an interest rate swap and a currency swap in ...