GENERAL HEDGING

The following table presents several situations in which a trader intends to buy or sell an asset at some point in the future and uses futures contracts to hedge the price risk between now and then. The table lists the assets, the intended actions on the spot market, futures prices at which the hedges are initiated and liquidated, the number of futures contracts used, the size of each contract, the spot prices at which the assets are eventually bought$/$sold$,$ and the size of the asset itself.

All prices are in dollars per unit of asset. The exact timing of the transactions is not critical. The only relevant fact is that the hedging position is opened now and closed at some point in the future simultaneously with the spot transaction.

For example, the first situation can be interpreted as the one where the trader plans to sell $67,342oz$ of silver, opens a position in $11$ futures contracts $5,000$ oz each at $$\frac{18\mathrm{.}3250}{?}$ oz today $($hedge initiation$),$ and, sometime later, closes the position at $$\frac{16\mathrm{.}4900}{?}$ z $($hedge liquidation$)$ while simultaneously selling $67,342$ oz of silver on the spot market.

For each scenario in the table

identify the position the hedger should take $($long or short$)$

identify the target price the hedger would expect to receive$/$pay for the hedged commodity

calculate the hedge ratio used by the hedger

calculate the effective net price received or paid for the asset at hedge liquidation

determine the basis at the initiation and closing of futures position

explain why the target price and the actual $($effective net$)$ price are different

Round your reslts to four decimal placeS