6. Answer the following questions on derivative securities. [15 marks] a) A gold-mining firm is concerned about short-term volatility in its revenues. Gold cur- rently sells for $650 an ounce, but the price is extremely volatile and could fall as low as $600 or rise as high as $690 in the next month. The company will sell 1,000 ounces in the market next month. Assume one month interest rate is zero. (i) What will be the total revenue if the firm remains unhedged for gold prices of $600, $630, and $690 an ounce? 13 marks] (ii) The future price of gold for delivery one month ahead is $660. What will be the firm's total revenues at each gold price ($600, $630, and $690) if the firm enters into a one-month futures contract to deliver 1,000 ounces of gold? [3 marks] (ii) Comment on the difference in firm's total revenue obtained in part (i) and part (ii) and explain the effect of the futures contract. [3 marks] b) Explain the difference between the short and long positions in futures transactions. 6 marks]