Consider the same 3-year oil swap. Suppose a dealer is paying the fixed price and receiving floating.

Question:

Consider the same 3-year oil swap. Suppose a is paying the fixed price and receiving floating. What position in oil forward contracts will hedge oil price risk in this position? Verify that the present value of the locked-in net cash flows is zero. Discuss. Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...