22-37 Tailing-the-hedge normally requires an FI manager to utilize more futures contracts to hedge a cash position than are warranted by the initial analysis.

Question

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Tailing-the-hedge typically involves using fewer futures contracts than initially calculated, as it accounts for the time value of money and the expected change in the value of the cash position over time.

22-37 Tailing-The-Hedge Normally Requires an FI Manager to Utilize More