The kind of instruments that is used for hedging the interest rates that are associated with bond issues is derivatives.
What are derivatives with regards to hedging?
This is a contract tool that firms and the government use for the mitigation of all forms of risks that may be exposed to them financially.
The different types of ways that hedging can be used for the sake of derivatives are:
- They are used for foreign exchange risks
- They are used for interest rate risk
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