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I have one doubt regarding in exam kit solution.
Using currency futures we use the number of contracts which is 38.
but when using the currency options we use the contracts 37 and the rest is hedged by using forward rate.
Why no under hedging was done for currency futures? it was overhedged
In the exam it does not matter which way you round when calculating the number of contracts – you still get the marks. (I always round to the nearest in both cases 🙂 )
Got it, sir I have silly doubt I guess, but when we overhedged in currency options we deducted the amount CHF21073 as it was extra I suppose. but for currency futures we did not deduct anything regarding overhedging
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