Assume that you are the Chief Financial Officer of the mining company XYZ. Today is August 2017. By checking the books, you predict a cash shortage in December 2017. You know that you can use 90-day bank bills to solve the cashflow crisis.

You have the information on the 90 Day Bank Bills Futures as in below

1. Would you buy or sell 90-day bank bills to help the situation? (buy or sell)

2. At the same time, you fear that the price of the 90-day bills is going to fluctuate over the next three months. You have decided to use 90-day BAB futures to hedge this risk. In order to hedge, would you long or short 90-day BAB futures? (long or short)

3. Assume you need exactly 4 contracts to hedge your cash shortage. How much is the cash shortage? $ (keep 2 decimal points)

4. Lets assume that in December 2017, the spot price for 90-day BAB is quoted at 97.50. Assume that you close-out your futures position. What is the gain (loss) on this contract? $ (keep 2 decimal points, add negative "-" sign for loss)

5. How much will you raise in the spot market by selling forty 90-day bank bills? $ (keep 2 decimal points)

6. What is the net position in December 2017? (keep 2 decimal points)

Maximum marks: 6