Why hedge? Objective: Neutralize the risk a An example A firm is due to sell an asset at a particular time in the future. The firm can hedge by shorting a futures contract Charles cao 22 Charles Cao Why Hedge? ◼ Objective: Neutralize the risk ◼ An example: ◼ A firm is due to sell an asset at a particular time in the future. The firm can hedge by shorting a futures contract