Is nathan speculating or hedging

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Reference no: EM131457837

Question: Consider the situation in sunny Southern California in 2005, where house prices have skyrocketed over the last few years and are at an all-time high. Nathan, a software engineer, buys a second home for $1.5 million. Five years back, he bought his first home in the same region for $350,000 and financed it with a thirty-year mortgage. He has paid off $150,000 of the first loan. His first home is currently worth $900,000. Nathan plans to rent out his first home and move into the second. Is Nathan speculating or hedging?

Reference no: EM131457837

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