Generous dynamics is planning on buying 3000 ounces of gold, Ask an Expert

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Generous Dynamics is planning on buying 3000 ounces of gold in six months. The correlation of the six-month change in the spot and futures price is . 95. The standard deviation of six-month change in spot and futures price are 14 percent and 33 percent, respectively. Futures contract size is 1000 ounces. How many contracts should GD buy or sell to hedge the future purchase?

a. Sell 1.2091 b. Sell 1.2727 c. Sell 6.7178 d. Buy 6.7178 e. Buy 1.2091

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Financial Management, Finance

Category:- Financial Management
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