The value of risk management and hedging

In this part we show how hedging (using futures contracts as a risk management instrument) can lower the firm’s capital cost and hence the value of the firm. In particular we show that hedging can help to manage the firm’s risk exposure and how it can be managed with the desired risk profile. The differences between commodity futures and financial futures, different types of risks and risk attitudes and risk perceptions will be addressed.

Go to the training