Question
Describe the contract and nature of hedge (specify for each contract if long or short position) that the following hedgers may use. Each hedger will
Describe the contract and nature of hedge (specify for each contract if long or short position) that the following hedgers may use.
Each hedger will have at least two different contracts. Assume the following contract are available: Gold, Silver, Crude Oil, Gasoline, heating oil, Natural Gas, Coal, Electricity, Euro currency, Wheat, Corn, DAX-German equity index, CAC French index, you may need all or some.
A: Natural Gas Turbine generating electrical power.
B: A US based stock fund with extensive investment in the German market.
C: Food producer using Wheat and delivering across the country in trucks
Portfolio managers can buy or write Call and/or Put option on the market index stock:
A: Stock portfolio mostly long stock investment
B: Portfolio that focuses on shorting stocks
Step by Step Solution
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Step: 1
A For a long position the portfolio manager could buy a call option on natural gas For a short ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
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