chapter 8

Commodity Market Derivative Instruments

Learning Objectives

After reading this chapter, you will be able to understand

  • commodity derivative products
  • hedging strategies and their impact
  • strategies using commodity futures
  • strategies using commodity options
  • using commodity swaps
Chapter Outline

8.1 Introduction

8.2 Product Category

8.3 Contract Specifications

8.4 Risk Management Strategies Using Commodity Futures

8.5 Risk Management Strategies Using Commodity Options

8.6 Risk Management Strategies Using Commodity Swaps

THE SITUATION

Seven Star Electricals Ltd uses copper wire as its raw material. At present, its supplier is a German firm. The company has quoted and obtained an export order to supply its products in six months. Stiff ...

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