Exam Technique on Over/under-hedging (Inspired by Polytot/SFM June 2004)

Hi John,

The question Polytot/SFM includes relatively complicated calculation of overr-hedged amount subject to FWD hedging in spite of futures/options.

The BPP answer states “Strictly you should also take into account the over-hedge and take the difference to the forward market to make the results strictly comparable with the forward market result; however you are unlikely to be penalised for not doing so.”

Given the time preasure at exam, would it be a reasonable exam technique to avoid calculation of over/under-hedging at all (unless number of contracts is low and thus the effect is material). Please clarify whether such an exam technique would be reasonable.

The overhedge might be complicated, though this won’t worth more than 1 mark.
Am I correct?

Thank you in advance.