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NO CHATGPT PLEASE I am really confused on how to answer this question. We have done the theory in class but have never used the
NO CHATGPT PLEASE I am really confused on how to answer this question. We have done the theory in class but have never used the website so im confused about how to navigate it Would really appreciate some help and for you to clearly explain what you are doing and with screenshots so i can get a solid handle on it for the rest of the questions. Thanks you Futures: Go to the CME Group website and choose the corn futures market contract. Please use a contract from April, May or June futures contracts for parts a and b Download the futures chart on the day you complete this question. Use the camera icon on Charts to access this and then use save image a Suppose a trader wants to set up a short hedge using the futures contract selected. Explain clearly any two reasons why hedging with futures contracts works less than perfectly in practice. b Explain what is meant by basis risk when futures contracts are used for hedging. Using the same example as part a explain when a long hedge would be appropriate. Using your own numerical example from the futures contract used, explain why a long hedgers position worsens when the basis strengthens unexpectedly and improves when the basis weakens unexpectedly. NB: For this question, you would also need the spot or cash price.
NO CHATGPT PLEASE
I am really confused on how to answer this question. We have done the theory in class but have never used the website so im confused about how to navigate it
Would really appreciate some help and for you to clearly explain what you are doing and with screenshots so i can get a solid handle on it for the rest of the questions.
Thanks you
Futures: Go to the CME Group website and choose the corn futures market contract.
Please use a contract from April, May or June futures contracts for parts a and b
Download the futures chart on the day you complete this question.
Use the camera icon on Charts to access this and then use save image
a Suppose a trader wants to set up a short hedge using the futures contract selected.
Explain clearly any two reasons why hedging with futures contracts works less than
perfectly in practice.
b Explain what is meant by basis risk when futures contracts are used for hedging.
Using the same example as part a explain when a long hedge would be appropriate.
Using your own numerical example from the futures contract used, explain why a long
hedgers position worsens when the basis strengthens unexpectedly and improves when the
basis weakens unexpectedly.
NB: For this question, you would also need the spot or cash price.
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