In a stack rolling hedge, the whole exposure will be hedged using the near-month contract. For exam-
ple, WIPRO will hedge the total amount of USD 1,200,000 that will be received over the next six months
with a forward or a futures contract with expiry in one month. When this contract expires, WIPRO will
roll over the remaining hedge amount of USD 1,000,000 with a forward or a futures contract with expiry
in one month. Since the amount hedged is dierent from the amount of exposure in any given month,
WIPRO is subject to basis risk if it follows a stack rolling hedge. A stack rolling hedge is usually emplo ...
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