What position should an investor take

Reference no: EM132950473

What position should an investor take if he/she is about to sell 7,000 pounds of copper in 6 months and plans to hedge using futures?

In the expiration date, what should the basis of a futures contract be like?

Under which of the following circumstances would cross hedging be adopted?

When the time of purchase/sale of the asset is different from the expiration time of the futures contract
When the amount of assets to be hedged is different from the size of the futures contract
When the asset to be hedged is different from the underlying asset of the futures contract
When the location of delivery of the assets is different from the designated delivery location of the futures contract

What is the optimal hedge ratio when the asset to be hedged is exactly matched with the underlying asset of the futures contract?

Reference no: EM132950473

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