 In this section, I will tell you how the price risk can be hedged using future contracts. So we have already discussed that future contracts are the contracts which people do, investors do or companies go for through the stock exchange and there are certain rules and regulations that regulate the selling and buying of the future's contracts. So with the help of an example, I'll explain how the price risk means the fluctuation in the price risk, how they can be hedged using the concept of future contracts. So suppose we are having a farmer in a situation which has grown crops and overall he is expecting to get a yield of around 10,000 mons, which we can call 10,000 mons in Urdu, that is 400,000 kg, which is its total output. The market price is Rs. 2,000 and the price of a mons is prevailing. And then there is another character which we have assumed as a baker, so the farmer basically wants to hedge, he wants to protect himself against any price fluctuation that might happen in the future So as a result, what happens that he decides to go for a futures contract, that is at the rate of Rs. 2,000 per month. So after a month, he will get Rs. 20 million for his entire crop, for selling his entire crop. So now we have given some values in this particular table which tell us what will happen if the price in the market after one month stays at Rs. 2,000 per month or it goes down Rs. 2,500 per month or it goes up Rs. 2,500 per month. So you can see that in this table, the overall proceeds from sale of wheat to distributor will be Rs. 20 million if the price stays at the rate of Rs. 2,000 per month. But the proceeds from sale of wheat to the distributor will go up from Rs. 20 million to Rs. 25 million if the price turns out to be Rs. 2,500 per month and similarly if the price goes up to Rs. 1,500 so the total proceeds which the farmer will get in this context will be Rs. 20,000,000,000,000 overall wheat to be sold, so that would be Rs. 15 million. So by doing this, overall the value of cash flow in that context, if the future contract takes place, so in this context, if the price stays at Rs. 2,000 per month, then you don't have to pay extra money to the farmer, the investor who has contracted the futures with the farmer, but in this case if the price goes down from Rs. 2,000 to Rs. 1,500,000,000, then he will have to give Rs. 5 million to the farmer and if it goes up to Rs. 25,000,000, then the farmer will benefit from it the person who has contracted the futures, who has bought wheat from the farmer through the future contract will benefit from Rs. 5 million, in this case if the price goes up to Rs. 25,000, because he is already buying wheat at Rs. 2,000 per month. So in the three cases, the total receipts of the futures contract, they will stay at Rs. 20 million, but you can see that there would be some loss or some profit in case of futures contracts and to generate this loss or profit, but at the same time, the parties involved in the future contracts have tried to reduce their risks through this particular contract. So basically what they have done is they have done hedging against the price fluctuations risk by going for the futures contract. Similarly, if we look at the Baker's transactions, then even in the context of Baker, if the price goes up to Rs. 2,000, then the price will go down to Rs. 1,000,000, or it will go down to Rs. 25,000,000, or it will go down to Rs. 1,500,000. In both cases, if the price goes up to Rs. 25,000,000, then the Baker will be paid to the Baker and it will benefit from Rs. 5 million. And in this case, if the price goes up to Rs. 1500, then the farmer will benefit from Rs. 5 million. So this is how they can buffer themselves to big shocks by pre-planning, by making these agreements or contracts in advance, or we know that when we are talking about future contracts, we need to understand and remember that whatever future contracts you are getting into, they will be done through the stock exchange. So it has to be done through a formal contract, through proper channels, through rules and regulations. Another important thing which we need to understand is that the biggest benefit of future contracts is that since the rules and regulations have to observe fall and through the stock exchange, all these transactions are there. Therefore, the risk of default there is minimized because the seller and buyer are both protected. They are doing it following a system. So there is a proper structured system which is governing the transactions of these two parties. Therefore, there is no default risk there. And all these positions where the farmer is taking a short position, the Baker is taking a long position. I had already explained that the short position means that you are expecting that the price might go down. Then the current level, the spot price, will go down. So you immediately want to sell your product. It means technical term or investment key terminology, according to a financial economics terminology, we say that the investor is taking a short position in this context. And if you expect that the price is going to escalate or increase in future, then you will buy something in the future. The price will increase in the future. So you are taking a long position. So this is how we go by these two terms and future contract. In the future contract, one party will take a short position, the other party will take a long position. And both are going for the future contract in order to minimize the risks attached with different types of investments.