For the following scenarios, describe a hedging strategy using futures contracts. Discuss the reasons for your choice of contract.
A stock mutual fund invests in large, blue-chip stocks and is concerned about a decline in the stock market.
A U.S. exporter of construction equipment has agreed to sell some cranes to a German construction firm. The U.S. firm will be paid in euros in three months.
A bank derives all its income from long-term, fixed-rate residential mortgages.