Problem:
Note whether the following are ways to avoid losses through hedging or insuring:
- Lock in a $979.00 fare home for the holidays.
- Purchase a put option on a stock you do own.
- Agree to purchase a house in one year for a fixed price of $200,000.
- Lease a car with an option to purchase it in three years.
- Enter into a swap contract to exchange fixed interest payments for floating-rate payments because you have floating-rate assets.
- As a wheat grower, enter into a forward contract to sell you wheat in two months at a fixed price set today.
- Pay a premium for catastrophic health care coverage.
- Pay for a credit guarantee on a loan you are worried about collecting.