future contracts

Why Might Sellers Enter Into A Futures Contract?

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Why Might Sellers Enter Into A Futures Contract? Companies may use futures contracts to hedge their exposure to certain types of risk. For example, an oil production company may use futures to manage risk associated with fluctuations in the price of crude oil. … The futures contracts allow the company to manage their risk and

Is Forward Contract A Risk Management Tool?

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Is Forward Contract A Risk Management Tool? At its core, a forward contract is a financial instrument used for hedging purposes as part of a risk management strategy. Forward contracts are an agreement between buyer and seller. What are the limitations of forward contract? As it is a private contract, there is no liquidity. Counterparty