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.Calculate the historical annual volatility of the NASDAQ index over the last year by computing the standard deviation of historical daily percentage returns and multiplying by 252. (The number of trading days in a year is typically taken to be 252.) Do the same for the S&P 500. You can use ETF data if necessary. How do the risks compare?

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.