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QUESTION 3 AB has 500 g of gold. Suppose the gold price is RM100 per gram in the cash market. The delivery price for a

QUESTION 3

AB has 500 g of gold. Suppose the gold price is RM100 per gram in the cash market. The delivery price for a short position in forward/futures market is RM90 per gram. AB is worried that the gold price is starting to drop during the past few weeks. How can AB use forward/futures contract to hedge his investment?

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