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I am not using tick value at all,but even in pilot paper question 2 they have given tick value as 25 what should i do with that ,is there any different name for this tick value.
I am assuming tick size as basis risk is that correct.You don’t need to use ticks.
However one tick is the smallest movement (so for currency futures it is 0.0001)
The value of one tick is the gain or loss that is made on 1 contract for a difference of 1 tick.
I do explain this in the free lectures.
So rather than examiner answer i m doing
.073×37×1000000÷400=6752.5 hope thats correct.
One thing more I wanted to ask if the question does not mention anything about forward rate then we don’t worry about over or under hedge,as in this question,am i right.
Thanks
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