How do managers use futures to limit risk exposure?

Question

How do managers use futures to limit risk exposure?

Answer 1

A futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price.

With the volatility of exchange rates nowadays, which most of the time is unfavorable, managers will enter into a contract that sets today the rate that will be used when the transaction will actually be executed.

Answer 2

To insulate against price fluctuations.....