1 a futures contract is used for hedging explain why the, Ask an Expert

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1. A futures contract is used for hedging. Explain why the daily settlement of the contract can give rise to cash-flow problems.

2. An airline executive has argued: ‘‘There is no point in our using oil futures. There is just as much chance that the price of oil in the future will be less than the futures price as there is that it will be greater than this price.'' Discuss the executive's viewpoint.

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