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To: Leaning Right

Without speculators there is not a liquid supply of counterparties for hedgers.


29 posted on 09/28/2014 8:46:34 PM PDT by impimp
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To: impimp
Without speculators there is not a liquid supply of counterparties for hedgers.

True, but I could live with that. The cost of the derivative would adjust to meet the supply-demand.

40 posted on 09/28/2014 9:03:02 PM PDT by Leaning Right (Why am I holding this lantern? I am looking for the next Reagan.)
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To: impimp

You are correct of course. People who aren’t finance people know nothing about hedging. For instance, if you are an oil and gas company and you buy a billion dollars worth of oil and gas reserves from another company. Are you really going to risk the price of the commodity falling and your deal becoming a big loser that bankrupts your company? Or are you going to hedge your exposure with a derivative? You and I know the answer.


42 posted on 09/28/2014 9:04:02 PM PDT by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
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