While financial futures contracts may be used to hedge the risk of fluctuations in the prices of the underlying securities

Posted: January 10th, 2022

While financial futures contracts may be used to hedge the risk of fluctuations in the prices of the underlying securities, the use of futures contracts often entails some risk. What are the sources of risk arising from the use of futures contracts in risk management? List, explain and demonstrate the implications of each type of risk. (LO 19.6)