Question
background: Metallgecellschaft Refining and Marketing Company (MGRM) that lost $1.3 billion on energy derivatives from 1991 to 1993. They took a short position in forward
background: Metallgecellschaft Refining and Marketing Company (MGRM) that lost $1.3 billion on energy derivatives from 1991 to 1993.
They took a short position in forward and swaps contracts (to sell gas and oil commodities) for a long term then hedged this exposure (price risk) by taking a long position in gas and oil futures contract for short terms.
sketch a graph on how the hedging/ speculation was conducted with labels (an example is provided underneath)
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Personal Financial Planning
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk
14th edition
978-1305887725, 1305887727, 1305636619, 978-1305636613
