Today, in the middle of March 2023, Feroz believe that the quotations of KLCI futures in the Bursa Malaysia Derivatives (BMD) are mismatched. Feroz interested to trade RM5 millions of his portfolio between July 2023 and September 2023. Currently, the Malaysia Treasury Bill is 3.8%. The beta for his company currently shows twice volatile than the market. Currently, KLCI shows 1300 points while KLCI futures is 1350 points. KLCI futures for July, August and September currently is 1315, 1323 and 1345 points respectively. Assume in June 2023, both indices converged at 1330. The dividend yield shows 1.5% lower than current Malaysia Treasury Bill.

3) Unlike most money market securities, commercial paper A) in general, has a time to maturity that is longer than a year. B) is not generally traded in a secondary market. C) is not popular with most money market investors because of the high default risk. D) all of the above.

Currently a three-month Treasury bill has a yield of 5% while the yield on a ten-year Treasury bond is 4.7%. What is the risk premium of an A-rated ten-year corporate bond with a yield of 5.5%? 0.5% 5.5% 0.8% 1.17%

Question 3 (6.5 points): Hedge October 15th: A producer plans to sell wheat in early July; currently, July wheat futures are trading at 680'6. The expected basis is $0.60 under. July 1 • Does the producer have a long or short cash position? Does the producer have a long or short futures position? To hedge: The producer will per bushel. What is the expected cash price? (buy/sell) July wheat futures at 680'6 ⚫ The producer must (buy/sell) wheat locally in the cash market at 562'2 per bushel. To offset their future position, they must. 599'4 per bushel. • What is the actual basis? • (buy/sell) July futures at 。 Was the basis stronger, weaker, or the same as expected? What is the realized price for the producer? Method 1: 。 Method 2: 。 The hedge resulted in a realized price of