Should J&L hedge all of its exposure to diesel fuel for the ensuing year?

Her best guess is that she can sell 300 cups per week at $0.50 per cup
July 30, 2019
What did you learn from this parable that might help you engage in ethical conduct in the workplace?
July 30, 2019

Should J&L hedge all of its exposure to diesel fuel for the ensuing year?

Hedging Strategy for Commodity Risk (J&L Railroad (UVA-F-1053)) Study Questions:
1. Should J&L hedge all of its exposure to diesel fuel for the ensuing year? What percentage of the 210 million gallons would you hedge?
2. What are the pros and cons of using NYMEX contracts versus using the risk-management products offered by KCNB? Is the use of a monthly average price a net advantage or disadvantage to J&L? What about the bank?
3. Using the estimate of 17.5 million gallons per month, how would you construct a futures hedge for the next 12 months? How would you construct a commodity-swap hedge?
4. Should Matthews use a cap as a hedge? What strike price for the cap would you recommend she choose?
5. If Matthews wants to minimize the cost of hedging, should she use a collar? What cap and floor strike prices would you recommend using?
 
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
Buy Custom Nursing Papers

Hi there! Click one of our representatives below and we will get back to you as soon as possible.

Chat with us on WhatsApp