What is an optimal hedge and how do we calculate it compute, Financial Management

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What is an optimal hedge and how do we calculate it compute

What is an optimal hedge and how do we calculate it? Compute the number of contracts we need in the hedge. How do we decide if we should implement the hedge? Why? Explain in full detail. Suppose you have a long cash position 200,000 ounces of gold. One gold futures contract is 100 troy ounces. ? Gold Price= 0.60 + 0.66 (? Gold Futures Price) + ε , R2 =0.48.

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Financial Management: What is an optimal hedge and how do we calculate it compute

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