Generous Dynamics is planning on buying 3000 ounces of gold in six months. The correlation of the six-month change in the spot and futures price is. 5. The standard deviation of six-month change in spot and futures price are 27 percent and 31 percent. respectively. Futures contract size is 1000 ounces. How many contracts should GD buy sell to hedge the future purchase? O Sell 1.3065 Buy 1.3065 Sell 1.7222

Generous Dynamics is planning on buying 3000 ounces of gold in six months. The correlation of the six-month change in the spot and futures price is. 5. The standard deviation of six-month change in spot and futures price are 27 percent and 31 percent. respectively. Futures contract size is 1000 ounces. How many contracts should GD buy sell to hedge the future purchase? O Sell 1.3065 Buy 1.3065 Sell 1.7222

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Types of Money Market Instruments

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Generous Dynamics is planning on buying 3000 ounces of gold in six months. The
correlation of the six-month change in the spot and futures price is. 5. The standard
deviation of six-month change in spot and futures price are 27 percent and 31 percent,
respectively. Futures contract size is 1000 ounces. How many contracts should GD buy or
sell to hedge the future purchase?
O Sell 1.3065
O Buy 1.3065
O Sell 1.7222
O Buy 1.7222
O Sell 2.6129

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