Tutorial Exercises Week 1
The price of gold is currently $1,000 per ounce. The forward price for delivery in
one year is $1,200. An arbitrageur can borrow money at 10% per annum. What
should the arb
Hedging Strategies Using Futures
Under what circumstances are (a) a short hedge and (b) a long hedge appropriate?
A short hedge is appropriate when a company owns an asset and expects to sell that asset in the