Step 1: Hedging Logic (1st Page) & Step 2: SPECULATING (2nd Page)
Please know that this is two different assignments.
Step 1: 100pts Hedging Logic
1.Step 1 – HEDGING 100pts
a. After the first class session, you will need to understand why hedging is a keyeconomic activity. Write a short paragraph describing what hedging is and whycorporations do it.
b. Choose a corporation, research the types of exposures they may have, and estimate the amount (s) they hedge. Provide an analysis similar to the class example.
PLEASE NOTE this hedging is not what Hedge Funds or Asset managers do where they protect the value of their stock portfolios. I am looking for the hedging corporations or other businesses, like farmers, do to transfer unwanted risk from their business to the part of the market that wants it.
Step 2 – SPECULATING 100pts
Step 2 – SPECULATING 100pts
Familiarize yourself with broad economic/market conditions. Begin to formulate anopinion and market expectations from the current business press on a particularcommodity of your choice.
a.Write a short paragraph as to what speculation is and who does it.
b.Choose an asset class that you want to speculate in. Explain your reasoning, base it on your market research.
https://www.investopedia.com/articles/trading/10/know-your-trading-alternatives.asp
