Business, 19.12.2021 22:30 stephaniem0216

The standard deviation of monthly changes in the spot price of oil is 1.20. The standard deviation of monthly changes in the futures price of oil for the December contract is 1.40. The correlation between the futures price changes and the spot price changes is 0.70. It is now October 15. An oil consumer is committed to buying 210,000 gallons of oil on November 15. This consumer wants to use the December futures contract to hedge risk. Each futures contract is on 42,000 gallons. How should the consumer hedge

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The standard deviation of monthly changes in the spot price of oil is 1.20. The standard deviation o...

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