A company has 10,000 units of commodity A to sell on Oct. The firm decide to hedge with a contract on commodity B (which is similar to commodity A). The optimal hedge ratio is 1.2. The futures price for a contract on commodity B is $90. The size of one Futures contract on commodity B is 1000 units. What trade is necessary?

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Here Firm is going to sell commodity A on Oct Her... View the full answer