Define the term hedging, Define the term hedging and and calculate contract investment, Finance Basics

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Define the term hedging

[A] You are currently long in a futures contract. You then instruct a broker to enter the short side of a futures contract to close your position. This is called __________.

[B] You buy one IBM July 120 call contract for a premium of USD 5. You hold the option until the expiration date when IBM stock sells for USD 123 per share. You will realize a ______ on the investment.

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Finance Basics: Define the term hedging

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