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What would the combined payoff look like

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Reference no: EM133011306

Problem 1: You are going to first replicate the risk management strategy of using futures contracts to hedge aluminum prices. Next, create a risk management strategy if you had the opposite natural position in aluminum (in other words, an inflow). What would your natural position look like? What type of futures contract would hedge this risk? Finally, what would the combined payoff look like?

 

Reference no: EM133011306

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