pogge
rabble-rouser
Babbler # 2440
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posted 11 March 2003 12:00 AM
From Mineweb: quote: Ismail is a successful mule trader in Peshawar. Every year Ismail delivers 30 mules to the Kabul Mule Market and gets $40 per mule. This year however, the Khyber Pass is full of warlord militias, so Ismail is not sure he can drive his mules to market without losing a mule here and there. Also, the demand for mules in Kabul seems to be dropping. Maybe he'll only be able to sell 20 mules, or, God forbid, 15, and then be forced to feed and water the rest of them on a money-losing trek back home. In other words, it's a scary market and Ismail is worried about feeding his family. What Ismail needs is to limit his risk with an Enron derivatives package.First he pays $2 per mule for a Khyber Pass Derivative, so that any mule killed or stolen by warlords will be reimbursed at the rate of $20 per mule -- half the going market rate, but still better than taking a total loss. Next he sells Enron Mule Futures. For $28 per contract, he guarantees delivery of a mule in three months time. He sells 15 of these, figuring that a guaranteed $28 mule sale is better than showing up in Kabul and discovering that the mule buyers have been killed by stray bombs...
From: Why is this a required field? | Registered: Mar 2002
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