The Report: Prepare a brief (less than two page) report in which you: 1. Detail and document the company you are investigating, as well as the sources of market risk to which you would have exposure if you invested in this company. 2. Identify, from information available at the CME Group or other sources, a hedge security that provides a practical hedge for each exposure. Provide brief details on each of the hedge securities that you will be using to hedge the exposures, and an example calculation to illustrate how the payoff on the hedge security is estimated (given its contract specifications). 3. Using diagrams display the exposures to the risks you have chosen to manage and, on the same diagrams, overlay the hedge and overall payoffs if you purchased the hedge security appropriate to each of the two risks you have chosen to manage.

The Task: Choose any non-financial company within the S&P/ASX 50 index and identify any source of market risk to which the company is exposed. You can identify these exposures using any financial reporting or news. Most of these companies have extensive documentation on their website, among other sources. While most of these companies have multiple exposures to each form of market risk, the identification of all sources of risk is a difficult task. As such, choose two types of market risk to analyse. For each of the two chosen market risk type, identify only one source of exposure within the company. By means of diagrams, graphically illustrate the risk. Informed by securities available through the CME Group or other sources, identify realistic products with which to hedge each of the two selected risks.