Subject category:
Finance, Accounting and Control
Published by:
Darden Business Publishing
Version: 8 June 2017
Revision date: 19-Jun-2017
Abstract
Because of the regulatory environment in the railroad industry, J&L Railroad''s profitability is dependent on the price of diesel fuel. In this case the student must decide how much of next year''s expected fuel demand should be hedged and how it should be hedged. Hedging alternatives include exchange-traded futures and options as well as commodity swaps, and collars offered by the Risk Management Group of a bank.
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Abstract
Because of the regulatory environment in the railroad industry, J&L Railroad''s profitability is dependent on the price of diesel fuel. In this case the student must decide how much of next year''s expected fuel demand should be hedged and how it should be hedged. Hedging alternatives include exchange-traded futures and options as well as commodity swaps, and collars offered by the Risk Management Group of a bank.
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