AB has 500 g of gold. Suppose the gold price is RM100 per gram in the cash market. The delivery price for a short position in forward/futures market is RM90 per gram. AB is worried that the gold price is starting to drop during the past few weeks. How can AB use forward/futures contract to hedge his investment?

Answer rating: 100% (QA)

To hedge ABs investment in gold using a forwardfutures contract the following steps can be taken 1 D... View the full answer