LeetQuiz Logo
Privacy Policy•contact@leetquiz.com
© 2025 LeetQuiz All rights reserved.
Financial Risk Manager Part 1

Financial Risk Manager Part 1

Get started today

Ultimate access to all questions.


Pear, Inc., a company that heavily depends on plastic components imported from Malaysia, aims to manage the risk posed by potential fluctuations in the price of plastic over the next 7.5 months. Unfortunately, it finds that direct futures contracts for plastic are not readily available. After conducting thorough research, Pear identifies alternative futures contracts on commodities that have a strong correlation with the price of plastic. The futures for Commodity A have a correlation coefficient of 0.85 with the price of plastic, while those for Commodity B have a correlation coefficient of 0.92. Moreover, both commodities offer futures contracts with expiration periods of 6 months and 9 months. Ignoring concerns related to market liquidity, which contract should Pear select in order to most effectively mitigate the risk of basis variation?

Exam-Like



Powered ByGPT-5