To summarize, if Et(DSt+s) = E(DSt+s) but the other conditional expectations equal their unconditional values and markets are efficient, a regression of DSt+ s on DFt+s yields unbiased but inefficient estimates of the minimum variance hedge ratio bt = b. Also the standard model tends to overestimate the risk (as measured by the variance) of both hedged and unhedged positions and to underestimate the percentage reduction in risk achievable by hedging.