2) Alfonso is a cattle rancher in west Texas. He plans to bring 116 thousand pounds of...

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2) Alfonso is a cattle rancher in west Texas. He plans to bring 116 thousand pounds of steers to market in September. Today is April. Alfonso plans to hedge his future sale with live cattle futures contracts. Each contract has 40,000 pounds of live cattle as the underlying asset. For whatever reason, Alfonso has decided to use 5 contracts in his hedge. What is his hedge ratio?

Posted Date: May 11, 2024 02:02 AM

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2) Alfonso is a cattle rancher in west Texas. He plans to bring 116 thousand pounds of...

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Expert Answer:

To calculate Alfonsos hedge ratio we need to determine the number of live cattle futures contracts he should use to hedge his future sale of 116000 pounds of steers Given that each live cattle futures contract ... View the full answer

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