9 and 10 both please
S. QUESTION 9 10 points Sive A company wishes to hedge its exposure to a new fuel whose price changes have a 0.6 correlation with gasoline futures price changes. The company will lose 1 milion for each 1 cent increase in the price per allon of the new fuel over the next three months. The new fuel's price change has a standard deviation that is 50% greater than price changes in gasoline futures prices. If gasoline futures are used to hedge the exposure what should the hedge ratio be? What is the company's exposure measured in gallons of the new fuel? What position measured in gallons should the company take in gasoline futures? How many gasoline futures contracts should be traded? Each futures contract is on 42,000 gallons For the toolbar, press ALT F10 (PC) or ALTHEN+F10 (Mac). BIUS Paragraph Arial 14px A T * x x T 174 + 1 * 2 A > iti > 4 Pert row before . O WORDS POWERED BY TINY QUESTION 10 10 points it is July 16. Acompany has a portfolio of stocks worth $100 million The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock Index to change the beta of the portfolio to 0.5 during the period July 16 to November 16. The index futures price is 2,000, and each contract is on $250 times the indexa) What position should the company take? bi Suppose that the company changes its mind and decides to increase the beta of the portfolio from 1.2 to 15. What position in futures contracts should it take? For the toolbar, press ALT+F10 IPO or ALTHAN F10 (Mac) BIUS Paragraph Aerial 14px A 2 T V !!! S. QUESTION 9 10 points Sive A company wishes to hedge its exposure to a new fuel whose price changes have a 0.6 correlation with gasoline futures price changes. The company will lose 1 milion for each 1 cent increase in the price per allon of the new fuel over the next three months. The new fuel's price change has a standard deviation that is 50% greater than price changes in gasoline futures prices. If gasoline futures are used to hedge the exposure what should the hedge ratio be? What is the company's exposure measured in gallons of the new fuel? What position measured in gallons should the company take in gasoline futures? How many gasoline futures contracts should be traded? Each futures contract is on 42,000 gallons For the toolbar, press ALT F10 (PC) or ALTHEN+F10 (Mac). BIUS Paragraph Arial 14px A T * x x T 174 + 1 * 2 A > iti > 4 Pert row before . O WORDS POWERED BY TINY QUESTION 10 10 points it is July 16. Acompany has a portfolio of stocks worth $100 million The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock Index to change the beta of the portfolio to 0.5 during the period July 16 to November 16. The index futures price is 2,000, and each contract is on $250 times the indexa) What position should the company take? bi Suppose that the company changes its mind and decides to increase the beta of the portfolio from 1.2 to 15. What position in futures contracts should it take? For the toolbar, press ALT+F10 IPO or ALTHAN F10 (Mac) BIUS Paragraph Aerial 14px A 2 T V
