Basis, the open block, volume, timing and margin cash are each sized and dated in the GF561 Unit 9 residual exposure review of a composite airline's fuel program shown here. Searches like "gf 561 unit 9 assignment example", "gf561 unit 9 sample" and "gf561 unit 9 example" land here.
What a finished GF561 Unit 9 residual exposure review looks like
A review of about four pages arranged as a register of residuals, each with a size, a trigger and a rank. The headline figure sets the whole six-month book against one month's typical price move: 4.69 million of swing unhedged, 2.59 million with the 303 contracts in place. Basis comes first, since a correlation of 0.91 leaves about 0.077 dollars a gallon of unexplained movement on hedged fuel, and a 35-cent widening of jet over diesel would cost 5.29 million with nothing to offset it. The 40 percent left open by policy carries 1.87 million of monthly swing. A volume cut of 45 percent in the first two months, arriving with a 1.10 fall, leaves 869,000 surplus futures gallons a month. Margin under that same fall reaches 14.0 million.
How a GF561 Unit 9 example is structured
An opening table lists the residuals with columns for source, size, trigger, likelihood and response, and the sections beneath take one row each. Every size is computed rather than described: the basis figure from the correlation already used to set the ratio, the open block from policy, the volume case from a stated demand scenario, and the cash figure from contract count, contract size and the assumed price fall. Timing receives a short section explaining that futures settle on fixed dates while fuel is burned daily, a small residual the review sizes as the average intramonth price range. Each section ends with its trigger in one sentence, the circumstance in which the residual stops being theoretical. A final ranking orders the five by expected cost and by severity, and those two orders differ.
One number for the whole book
Unhedged swing of 4.69 million against 2.59 million hedged shows the program cut risk by about 45 percent, and the review says what that figure assumes.
Basis from the ratio's own inputs
A correlation of 0.91 leaves 41 percent of jet fuel's volatility unexplained on hedged gallons, about 0.077 dollars a gallon each month.
The open block is policy
Forty percent of consumption stays unhedged by design, carrying 1.87 million of monthly swing, and the review treats it as a decision to revisit rather than a gap.
When volume and price fall together
Any schedule cut deeper than about 20 percent in a near month over-hedges it; at 45 percent, with a 1.10 fall, the surplus costs about 956,000 a month.
Margin due before fuel is burned
Variation margin of 14.0 million after that same fall is due within days, while the matching savings accrue only as the aircraft fly.
Where marks go in GF561 Unit 9
Residual reviews lose most when they declare the hedge effective and list risks without sizes, since the unit exists to put numbers on what the hedge leaves. Basis described in general terms, without using the correlation that set the ratio, draws comment because the figure was already on the page. Treating the open 40 percent as a failure rather than a policy choice misreads the program. Volume risk is often missed entirely, and graders look for the case where demand and price fall together, which turns part of a hedge into a speculative position. Liquidity sized without the variation margin a fall creates overlooks the residual most likely to force a bad decision. Reviews that rank by one criterion only, likelihood or severity, tend to recommend the wrong response first.
Get a GF561 Unit 9 example written to your instructions
For the GF561 Unit 9 review, the hedge from the earlier memo, the price data behind it and the rubric will do; a section that supplied its own position can send that instead. Each residual comes back sized, triggered and ranked, with the arithmetic shown. First custom sample free of charge, with delivery in about 24-48h.
GF561 Unit 9 questions, answered
How do I size basis risk?
Use the correlation that set the hedge ratio. The unexplained share of the spot price's volatility is the square root of one minus the correlation squared, 41 percent in the sample, applied to the hedged gallons. A scenario then shows the same risk in dollars, here a 35-cent widening of jet over diesel, so the grader sees both a statistical and a concrete figure.
Is the unhedged portion a residual exposure?
It is an exposure the firm chose to keep, and the sample reports it separately from residuals the hedge failed to remove. Both matter to the treasurer, but they call for different responses: the open block is revisited through policy, while basis and volume risk are managed through instrument choice and layering. Keeping them distinct is usually what earns full marks.
What makes a trigger specific enough?
A trigger names an event and a threshold, not a category. The sample's volume trigger is a schedule cut deeper than 20 percent in either of the first two months, the point where those months become over-hedged, and its basis trigger is jet trading more than 25 cents over diesel. Phrases such as market volatility are too broad to act on.