Question
As a gold producer you need to hedge one year's production at a time (current production is 2,700oz/month).The following futures contracts (100 oz each) are
As a gold producer you need to hedge one year's production at a time (current production is 2,700oz/month).The following futures contracts (100 oz each) are available:
Contract monthPrice# of contracts
Jan1255
Apr1262
Aug1269
Dec1279
The current market price is $1,251.Note the structure of the hedge and the number of contracts required for each contract period.Should you consider hedging less than 100% of the production - if so, then why and how much?
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Cases in Financial Reporting
Authors: Michael J. Sandretto
1st edition
538476796, 978-0538476799
