What is unrealized gains and losses from cash flow hedging derivatives?

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Derivatives are used to hedge against volatility in cash flows. They are used with an objective to maintain the cash flow within a certain range, with movment in either direction restrained.

If circumstances arise that require the use of these derivatives, they protect the holders from losses, which are said...

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Derivatives are used to hedge against volatility in cash flows. They are used with an objective to maintain the cash flow within a certain range, with movment in either direction restrained.

If circumstances arise that require the use of these derivatives, they protect the holders from losses, which are said to be unrealized as they would have occurred in case the derivatives had not been used.

The use of derivatives does not prevent the cash flow only from falling. Many of them limit the gains that could have been made in case the circumstances are opposite to what the derivatives had been used to protect against. These are unrealized gains that cannot be enjoyed as a result of hedging.

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