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How many contracts should gd buy or sell

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Question - Generous Dynamics maintains an inventory of 15000 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 .55, the standard deviation of the daily spot price change is 20 percent, and the standard deviation of the daily change in the futures price is 37 percent. Futures contract size is 1000 ounces. How many contracts should GD buy or sell to hedge its inventory?

Reference no: EM133048560

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