The financial uncertainty of the late 1970s and the 1980s has generated great interest in the futures and forward markets. Both markets can be used by a firm which owns an asset and wishes to protect its value from potential price decline. The firm could hedge the value of its asset by selling a forward or futures contract at the current price of its asset with an agreement to deliver such an asset at a prespecified future date. If, between now and the delivery date, the price of the asset declines, the firm is perfectly protected because of its forward or futures contract which has locked in the current price. However, if the price of the asset increases, by analogy, the firm could not enjoy any windfall profit because the futures or forward contract has prespecified the price.