For the following scenarios, describe a hedging strategy using futures contracts that might be considered.
a. A public utility is concerned about rising costs.
b. A candy manufacturer is concerned about rising costs.
c. A corn farmer fears that this year’s harvest will be at record high levels across the country.
d. A manufacturer of photographic film is concerned about rising costs.
e. A natural gas producer believes there will be excess supply in the market this year.
f. A bank derives all its income from long-term, fixed-rate residential mortgages.
g. A stock mutual fund invests in large, blue-chip stocks and is concerned about a decline in the stock market.
h. A U.S. importer of Swiss army knives will pay for its order in six months in Swiss francs.
i. A U.S. exporter of construction equipment has agreed to sell some cranes to a German construction firm. The U.S. firm will be paid in euros in three months.

  • CreatedAugust 28, 2014
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