subject
Business, 30.05.2020 23:03 aprilwilson3p8711m

Suppose that the standard deviation of monthly changes in the price of commodity A is $2. The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3. The correlation between the futures price and the commodity price is 0.9.

1. What hedge ratio should be used when hedging a one month exposure to the price of commodity A?

a. 1.22

b. 0.60

c. 0.93

d. 0.65

ansver
Answers: 1

Another question on Business

question
Business, 21.06.2019 23:10
Kando company incurs a $9 per unit cost for product a, which it currently manufactures and sells for $13.50 per unit. instead of manufacturing and selling this product, the company can purchase product b for $5 per unit and sell it for $12 per unit. if it does so, unit sales would remain unchanged and $5 of the $9 per unit costs assigned to product a would be eliminated. 1. prepare incremental cost analysis. should the company continue to manufacture product a or purchase product b for resale? (round your answers to 2 decimal places.)
Answers: 1
question
Business, 22.06.2019 11:00
Why are the four primary service outputs of spatial convenience, lot size, waiting time, and product variety important to logistics management? provide examples of competing firms that differ in the level of each service output provided to customers?
Answers: 1
question
Business, 22.06.2019 17:30
What is the sequence of events that could lead to trade surplus
Answers: 3
question
Business, 22.06.2019 19:30
Which of the following statements are false regarding activity-based costing? non-manufacturing costs are important to include when calculating the cost of each product. costs are allocated based on a pre-determined overhead rate. transitioning from traditional costing methods to activity-based costing can be complicated and costly. activity-based costing follows the same basic calculation methods as traditional costing approaches. none of the above
Answers: 2
You know the right answer?
Suppose that the standard deviation of monthly changes in the price of commodity A is $2. The standa...
Questions
question
Mathematics, 16.12.2021 23:20
question
Mathematics, 16.12.2021 23:20
Questions on the website: 13722362