Three corn producers (farmer A, B and C) are producing the amount of corns based on...
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Three corn producers (farmer A, B and C) are producing the amount of corns based on the corn price as follows: Corn Price ($ per bushel) 1 1 2 2 3 3 A (million bushel) 1.0 1.0 1.0 1.0 1.0 1.0 Production Scenario B (million bushel) 1.8 1.7 1.6 1.5 1.4 1.3 C (million bushel) 1.3 1.4 1.6 1.7 1.8 1.9 Assume that each price of corn and the quantity are equally likely to be occurred. (a) Find the unhedged revenue for farmer A; (b) Find the expected quantity hedged revenue and the variance-minimizing hedge ratio revenue for farmer B and farmer C; (c) Find the variability (standard deviation) for all the revenues; (d) Comment the revenue variabilities. Three corn producers (farmer A, B and C) are producing the amount of corns based on the corn price as follows: Corn Price ($ per bushel) 1 1 2 2 3 3 A (million bushel) 1.0 1.0 1.0 1.0 1.0 1.0 Production Scenario B (million bushel) 1.8 1.7 1.6 1.5 1.4 1.3 C (million bushel) 1.3 1.4 1.6 1.7 1.8 1.9 Assume that each price of corn and the quantity are equally likely to be occurred. (a) Find the unhedged revenue for farmer A; (b) Find the expected quantity hedged revenue and the variance-minimizing hedge ratio revenue for farmer B and farmer C; (c) Find the variability (standard deviation) for all the revenues; (d) Comment the revenue variabilities.
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a Unhedged Revenue for Farmer A For Farmer A the unhedged revenue is the expected production multiplied by the corn price The expected production of F... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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