A firm follows a ROLL futures strategy, in which it uses a multiyear policy to hedge 1 million barrels of oil it must buy, per year for 4 years. {T or False - In that strategy, the firm would go Long a million barrels in oil futures, in the first year. After the year is over, it would then go Long the next million barrels, etc. }

True or false

Suppose a company wants to hedge a real risk. There are 2 different futures contracts it can use, AA and BB. If the company uses AA, the Correlation= o.7 between futures and the real risk, and the optimal hedge ratio is 1. For BB, Correlation= o.9 and optimal hedge ratio is also o.9 . Which futures contract will probably be best for hedging? AA or BB or Need-More-Info