Question: Given the same client as Assignment #1 with a portfolio of $1,000,000 in an S&P 500 Index exchange traded fund and $1,000,000 in 10-year U.S.

Given the same client as Assignment #1 with a portfolio of $1,000,000 in an S&P 500 Index exchange traded fund and $1,000,000 in 10-year U.S. Treasury bonds. 1. Since last time, the client has inherited a family trucking business that distributes produce to grocery stores. The business has 10 trucks with annual fuel expenses reaching $500,000 in fuel costs. The trucks are financed with a currently loan balance on all the trucks being $800,000 in a short-term loan tied to 3-month financing rates. The client cant sell the business since it has a low-cost basis and would subject the client to taxes. The clients family hedged some of the risks in the business, but now the client must take over the business and is looking to you to hedge out some of the bigger costs including fuel and interest rate costs due to potential rising rates. Recommend and trade a strategy top help the client hedge out the big risks in the trucking business.

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