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There are two things: First: You have one stock of $B$ (worth \$30) and the calculation tells you to short 1.14 stocks of $A$. Of course you can only short whole stocks. So you would have to decide wether to short 0,1 or 2 stocks. This is a question of contract size, or in this case just size. Second: Usually we speak about hedging in portfolio context. In ...


My 10 cents: Yes, the EUR is trading at a discount to USD. Think 100 - 2.8 = 97.2 for EUR, whereas 100 - 1.5 = 98.5 for USD so EUR is at a discount to USD. The calculation of premium and discount is in the forward pips. In your case it's spot - pips = forward 1.3195 - 0.0195 = 1.3000 So yes, the EUR cost in 6 months is $2500 / 1.3 = €1923.07 you agree ...

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