cross-hedging

Explain the uses of futures for speculating and arbitraging activities. Given the efficient market hypothesis why the chances of making arbitrage profits are said to be rare.

Gamma airlines is currently considering a) to fix the price for their future jet fuel purchases; and, b) fix the exchange rate for their future international receipts. As a financial advisor of the firm you have advised them: 1. for the first (a) to buy a future on crude oil (cross-hedging) 2. For the latter […]

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