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Determining the current net position

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A is an automobile enthusiastic in Melbourne, currently sport cars prices in Melbourne have skyrocketed. A buys a new Chevrolet corvette for $890,000. Last 5-years he bought Maserati MC20 for $5?0,000 and financed it with 10-years loan from his financial broker. He has paid off $480,000 of the first loan. His Maserati MC20 has depreciated and is currently worth $350,000 on the spot market. In order to minimize is net exposure, A plans to sell his Maserati MC20 on the spot market and keep his new Chevrolet corvette.

i. Is A hedging or speculating? Explain

ii. What would be his current net position from the above information, if A sold his Maserati MC20'?

Reference no: EM133068754

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