Question
Yukon Goldrush Corp. anticipates a future sale of 50,000 oz. of gold in three months from its gold mining business. Which of the following is
Yukon Goldrush Corp. anticipates a future sale of 50,000 oz. of gold in three months from its gold mining business. Which of the following is the correct hedging strategy? Assume that gold futures prices are fair in the sense that they equal their respective no-arbitrage values.
Also assume that today is February 28 and the sale is anticipated for May 28. Currently, NYMEX has gold futures contracts listed with the following delivery months: March, April, May, and June.
Group of answer choices
Take a long position in 50 May gold futures contracts.
Take a long position in 500 May gold futures contracts.
Take a short position in 50 May gold futures contracts.
Take a long position in 500 June gold futures contracts.
Take a short position in 500 June gold futures contracts.
Take a short position in 500 May gold futures contracts.
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
10th Edition
1260013820, 978-1260013825
