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Futures market and hedging

I need answer for all questions:
1. "Futures Market" Please respond to the following:

- Analyze how the futures market has developed in some areas such as cattle and hogs, but not chickens. Predict the next addition to the futures market. Provide support for your answer.
- Explain how the futures market can be used to minimize risk and indicate your own comfort level in dealing in the futures market. Explain your rationale.

2. "Hedging" Please respond to the following:
- Create a scenario where an investor would benefit from using forward and future contracts to hedge an existing risk exposure.
- Explain how an increase in interest rates may impact the scenario you created.

Solution Preview

Futures Market, Hedging
I need answer for all questions:
1. "Futures Market" Please respond to the following:
- Analyze how the futures market has developed in some areas such as cattle and hogs, but not chicken:
The futures market has grown in both cattles and hogs, however the sales of these two of these two protein sources has been stagnant in the US for a while. That is why we have seen stagnant or decreasing prices. I feel chicken (with its increase in sales worldwide) will be added to the futures markets eventually and fairly soon. ...

Solution Summary

The futures market and hedging are examined. A scenario where an investor would benefit from using forward and future contracts to hedge an existing risk exposure is provided.

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