You work for a gold mine. The mine recently announced new production of 100,000 ounces a year for 5 years. How would you hedge the production?
You work for Southwest, and they wish to hedge their jet fuel purchases. They can only use crude oil futures to hedge their purchases. The beta of jet fuel with respect to crude oil is 0.75. If you wish to hedge 1,000,000 barrels of jet fuel, what would you do?
Your company sold a business unit to an Australian company. You will receive $50 million Aussie dollars at the end of the year. If 1 Aussie Dollar future has 125,000 Aussie dollars in it, what do you do?