Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. suppose that apple juice production company is pla

Suppose that Apple Juice Production Company is planning to sell 40,000 pounds of apple some...

50.1K

Verified Solution

Question

Finance

  1. Suppose that Apple Juice Production Company is planning to sell 40,000 pounds of apple some future date. The variance of changes in the futures price per pound vdF is 14.73, that for changes in the spot price per ounce vdS is 13.88, and the correlation coefficient between the spot and futures price changes corrS,F is 0.78. The contract size is 150 pounds per contract.
    1. Compute the optimal hedge ratio for the Apple Juice Production Company.
    1. How many contracts do they need to hedge their position? Will this be a buying or a selling hedge? Please show all the steps with formula !!

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Investigate the effect of the term on simple interest amortized auto loans by finding the monthly...

Statistics
Q

. A simply supported reinforced concrete beam needs to be designed with the following details: Size...

Civil Engineering
Q

Tiny dust particles are attracted to static charges, so if you could get them from the...

Physics
Q

This Discussion Forum is a two-part question: 1.Two broad foreign policy approaches to the Internet have...

Psychology
Q

1 What is an extraneous solution to the equation x 3x 40 A 8 B...

Geometry
Q

Introduction The first Ferris Wheel was built in 1893 for the world s fair in...

Geometry
Q

The 1995 payroll amounts for all major league baseball teams are shown below According to...

Statistics
Q

When the market rate of interest was 11%, Munson Corporation issued $1,000,000, 12%, 8-year bonds...

Accounting
Q

Soriano Company tuvo ventas netas de $300,000 en el mes (despus de devoluciones y descuentos...

Accounting
Q

The fixed overhead budget variance measures the difference between the actual fixed overhead costs incurred...

Accounting
Q

What is the situation most likely to require process and technical controls to fulfill roles...

Accounting
Q

Please review these competencies using a synonym (STAR).This should written in simple terms and easy...

Accounting