the subject is Risk management

O Search (Alt+Q) Review View Developer Help v = = =||| S AL Normal No Spacing Heading 1 Paragraph Styles DO 1 1 2 1 3 4 5 6 On March 1 the price of Nickel (LME* prices in USD per ton) is 16,030 and the July futures price is 16.083. On June 1, the price of Nickel is 16.425 and the July futures price is 16,558. Muck GmbH is in the business of recycling metals (like Nickel) and they need to hedge the sale of Nickel Muck entered into a futures position on March 1 for sales transactions planned for June 1. Muck closed out the futures position on June 1. *London Metal Exchange) How is the above hedge position called and why? What is the risk that Muck intends to cover? Explain the term "basis risk" in the context of Muck's situation Fill out the table below: Determine all relevant prices for the underlying and the futures. Also determine the basis at March 1 and June 1. Determine the gain and/or the loss in the individual positions and the change in the basis. Did the basis weaken or strengthen, and what does it mean for the company's total position? Briefly comment your findings. Position Stor F. Srti or F1 gain(+) loss Basis -> Desktop O LG O Search (Alt+Q) Review View Developer Help v = = =||| S AL Normal No Spacing Heading 1 Paragraph Styles DO 1 1 2 1 3 4 5 6 On March 1 the price of Nickel (LME* prices in USD per ton) is 16,030 and the July futures price is 16.083. On June 1, the price of Nickel is 16.425 and the July futures price is 16,558. Muck GmbH is in the business of recycling metals (like Nickel) and they need to hedge the sale of Nickel Muck entered into a futures position on March 1 for sales transactions planned for June 1. Muck closed out the futures position on June 1. *London Metal Exchange) How is the above hedge position called and why? What is the risk that Muck intends to cover? Explain the term "basis risk" in the context of Muck's situation Fill out the table below: Determine all relevant prices for the underlying and the futures. Also determine the basis at March 1 and June 1. Determine the gain and/or the loss in the individual positions and the change in the basis. Did the basis weaken or strengthen, and what does it mean for the company's total position? Briefly comment your findings. Position Stor F. Srti or F1 gain(+) loss Basis -> Desktop O LG