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Briefly explain the mean-variance hedge ratio for hedging a spot position using futures contracts (you do not need to derive it.) What difference does the
Briefly explain the mean-variance hedge ratio for hedging a spot position using futures contracts (you do not need to derive it.)
What difference does the assumption that the expected futures return is zero make in the hedge ratio and briefly explain why the hedge ratio may not be equal to one.
Explain the role of the coefficient of risk aversion in the mean-variance hedge ratio for hedging a spot position using futures contracts (you do not need to derive it)
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