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Question 3 a) An orange juice producer is concerned about future market prices for their product. i. Describe the use of futures to manage this
Question 3 a) An orange juice producer is concerned about future market prices for their product. i. Describe the use of futures to manage this risk ii. Describe the use of options to manage this risk. iii. Discuss the benefits and disadvantages of both approaches. (10 marks) Explain what is meant by delta hedging. Demonstrate using a numerical example. (5 marks) c) Explain and discuss the issue of funding liquidity risk. (10 marks)
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