4. Can you provide an example of basis risk as it applies to hedging a portfolio of stocks with equity index futures? 5. If a farmer sells his corn forward on the harvest date, what risks have increased and what risks have decreased, compared to not selling forward? 6. Use monthly data to compute the volatility and correlation between the NASDAQ and S&P returns over the last 1 year, over the last 2 years, and over the last 5 years. Show your results on a graph. 7. Calculate the historical volatility of the NASDAQ index over the last year by computing the standard deviation of historical returns and multiplying by sqrt(252). (The number of trading days in a year is typically taken to be 252.) Use your volatility estimate to simulate the risk each month in a 12 month futures position. What is the cumulative maximum loss of a long or a short position in each of the months, assuming the position is held until maturity?' 4. Can you provide an example of basis risk as it applies to hedging a portfolio of stocks with equity index futures? 5. If a farmer sells his corn forward on the harvest date, what risks have increased and what risks have decreased, compared to not selling forward? 6. Use monthly data to compute the volatility and correlation between the NASDAQ and S&P returns over the last 1 year, over the last 2 years, and over the last 5 years. Show your results on a graph. 7. Calculate the historical volatility of the NASDAQ index over the last year by computing the standard deviation of historical returns and multiplying by sqrt(252). (The number of trading days in a year is typically taken to be 252.) Use your volatility estimate to simulate the risk each month in a 12 month futures position. What is the cumulative maximum loss of a long or a short position in each of the months, assuming the position is held until maturity