Can somene name an example of a corporation that has successfully managed risk using derivatives?
Answers:
Derivatives in their simplest form include commodities futures contracts on products such as soybeans, wheat, corn, etc. So, any company using these commodities manages risk by buying futures. Kellogg, for example, would have been miles ahead if starting several years ago they bought corn futures forward. This would have fixed the price of corn flakes despite the fact that corn prices have risen significantly in the past few months (ethanol ==> gasohol)
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