Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 12 6.25 pts Generous Dynamics maintains an inventory of 18000 ounces of gold. The company is interested in protecting the inventory against daily price
Question 12 6.25 pts Generous Dynamics maintains an inventory of 18000 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. 4, the standard deviation of the daily spot price change is 27 percent, and the standard deviation of the daily change in the futures price is 34 percent. Futures contract size is 1000 ounces. How many contracts should GD buy or sell to hedge its inventory? Buy 5.7177 Sell 9.0667 Sell 5.7177 Buy 9.0667 Sell 14.294
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started