Consider a cash flow given by y= STW +(Fr- Fd h. Let osa= var(ST), 0 var(Fr), and Ost=COV(ST.FT). The equal and opposite hedge h is given by an opposite equivalent dollar value of the hedging instrument. So h=-kW, where k is the ratio between the asset and hedging instrument. Express the standard deviation of y. 211/2 Oy = OF 2 os Oy worofitamento - wo (1-2 hope to see 0; = 240(1- 0, - no 1-2 kompetent hotely 2 1/2 OST +K2 Of os 2 1/2