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To: Zardoz who wrote (38260)8/3/1999 5:47:00 PM
From: Follies  Read Replies (2) | Respond to of 116976
 
You two are really confusing me.

Hutch, is there a difference between selling forward and selling a futures contract? If not, lets just use one term and not two terms for the same thing.

Why is this a commodity swap amd not a hedge?




To: Zardoz who wrote (38260)8/3/1999 6:22:00 PM
From: Enigma  Respond to of 116976
 
You proved why your above example is not a hedge. It doesn't offset risk

You're wrong, surprisingly, on two counts:

1. It offsets price risk to the downside - in ABX's case this is mitigated by its options programme.

2. They have no risk of ownership since they have the reserves.

If you're having difficulty wrapping your impressive mind round this relatively simple matter Hutch - just try to thing of the Kansas corn grower. Take care. d




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