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Derivatives




Asset Mismatch


A situation that arises when the risk associated an asset is to be hedged but there is no futures contract on that asset is available in the market. This creates an asset mismatch and gives rise to the so-called cross-hedging risk when a related asset is used instead: hedging against price risk in related assets or using futures whose expiration dates differ from those of the assets used as a hedge.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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