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Generous Dynamics maintains an inventory of 1 5 0 0 0 ounces of gold. The company is interested in protecting the inventory against daily price
Generous Dynamics maintains an inventory of ounces of gold. The company is interested in protecting the inventory against daily price changes. The correlation of the daily change in the spot and futures price is the standard deviation of the daily spo price change is percent, and the standard deviation of the daily change in the futures price is percent. Futures contract size is ounces. How many contracts should G buy or sell to hedge its inventory?
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