two basic types of hedges involving the futures market are long hedges and short hedges, where the words "long" and "short" refer to the maturity of the hedging instrument For example, a long hedge might use Treasury bonds, while a short hedge might use 3-month T-bills.

Question

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The terms "long" and "short" in hedging refer to the position taken in the futures market, not the maturity of the instrument. A long hedge involves buying futures contracts to protect against price increases, while a short hedge involves selling futures contracts to protect against price decreases.

Two Basic Types of Hedges Involving the Futures Market Are