2. In this question we consider a gold miners hedging activities. (a) What is the natural position...
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2. In this question we consider a gold miner’s hedging activities.
(a) What is the natural position of a gold miner? Describe using payoff diagrams.
(b) How would a gold miner hedge her position if gold prices are expected to drop steadily over the years? Show using payoff diagrams.
(c) Would this hedge ever lead to losses?
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