This paper develops a theory of corporate hedging in a financial contracting framework. In an economy with moral hazard and state uncertainty, the optimal financial contract incorporates both non-monitoring (arm's length) finance and monitoring (bank) finance, and its payoff is equity-like. When...

Derivative instruments : forwards, futures, options, swaps, and structured products / G.D. Koppenhaver -- The derivatives marketplace : exchanges and the over-the-counter market / Sharon Brown-Hruska -- Speculation and hedging / Greg Kuserk -- The social functions of financial derivatives /...