Subject category:
Case Method and Specialist Management Disciplines
Published by:
Darden Business Publishing
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Abstract
A farmer can lock in the prices of his product and wants to know how much, if any, of the production should be hedged. This case examines how the answer is affected by factors such as the certainty of how much will be produced, the relationship between prices and production, and the risk aversion of the farmer. This case permits an analysis of how hedging policies should change reflecting the different behavior of the variables that affect the results.
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Abstract
A farmer can lock in the prices of his product and wants to know how much, if any, of the production should be hedged. This case examines how the answer is affected by factors such as the certainty of how much will be produced, the relationship between prices and production, and the risk aversion of the farmer. This case permits an analysis of how hedging policies should change reflecting the different behavior of the variables that affect the results.
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