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Is an example of a cash flow hedge

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Problem 1: Green company purchased 1,000 units of common stock of DRE company on Oct 10 2021 for $50 a share, total cost $500,000. On the very next day, Green Co. purchased 50 Put contracts with when the market price was $50, strike price of $50 for 90 days. They purchased the put options at a Premium of $3.00. This purchase was to protect the value of the DRE investment from going down in the market. This means if the DRE stock should go down, the value of the DRE put will go up. Is this an example of a cash flow hedge? Explain.

Reference no: EM132631087

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