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

Financial Risk Manager Part 1

Get started today

Ultimate access to all questions.


Comments

Loading comments...

Pear, Inc. is a manufacturer that is heavily dependent on plastic parts shipped from Malaysia. Pear wants to hedge its exposure to plastic price shocks over the next 7.5 months. Futures contracts, however, are not readily available for plastic. After some research, Pear identifies futures contracts on other commodities whose prices are closely correlated to plastic prices. Futures on Commodity A have a correlation of 0.85 with the price of plastic, and futures on Commodity B have a correlation of 0.92 with the price of plastic. Futures on both Commodity A and Commodity B are available with 6-month and 9-month expirations. Ignoring liquidity considerations, which contract would be the best to minimize basis risk?

Real Exam
Community
LLeetQuiz



Powered ByGPT-5