Series 3: Exercise

Exercise

Please note which of the following is described below.

A. Short hedge

B. Long hedge

1. _____ An investor is long an asset and short a futures contract.

2. _____ A hedger is long the current basis.

3. _____ Hedging strategy in which strengthening basis will increase profits.

4. _____ Hedging strategy in which weakening basis will increase profits.

5. _____ Hedger has a short basis position.

6. _____ Protects against falling prices.