User Account

All Pages

What is the company exposure measured in gallons

Assignment Help Management Theories
Reference no: EM132797024

An airline wants to hedge its exposure to jet fuel whose price changes have a 0.5 correlation with gasoline futures price changes. The airline will lose $0.25 million for each 1 cent increase in the price per gallon of the jet fuel over the next six months. The jet fuel price changes have a standard deviation that is 30% greater than price changes in gasoline futures prices.

a. If gasoline futures are used to hedge the exposure, what should the hedge ratio be?

b. What is the company's exposure measured in gallons of the jet fuel?

c. What position, measured in gallons, should the company take in gasoline futures?

d. How many gasoline futures contracts should be traded? Each contract is on 42,000 gallons.

Reference no: EM132797024

Questions Cloud

Determine the depreciation for the current fiscal year : Determine the depreciation for the current fiscal year and for the following fiscal year by (a) the straight-line method and (b) double-declining-balance method
Make the necessary entry to record the payment of payroll : Make the necessary entry to record the payment of the payroll. The company is allowed a 1% unemployment compensation rate by the state
Describe the purpose of the study by writing a statement : Describe the purpose of the study by writing a statement that completes the following sentence, "The purpose of this study was to..." (two to three sentences).
Determining the yield to maturity on the bonds : Par value of the bond is $1,000. What is the yield to maturity on the bonds if you purchased the bond today?
What is the company exposure measured in gallons : An airline wants to hedge its exposure to jet fuel whose price changes have a 0.5 correlation with gasoline futures price changes. The airline will lose $0.25 m
Determine the depreciation for each of the first two years : Assuming that it will have no residual value, determine the depreciation for each of the first two years (a) by the straight-line method
Prepare the journal entry to record depletion for concord co : Concord Corporation, a publicly traded mining company, Assuming that 790 tonnes are extracted in the first year, prepare the journal entry to record depletion
Describe twenty keys to financial strategy : For this Question, examine Table 8.4 attached, "Twenty Keys to Financial Strategy," of your Small College Guide to Financial Health: Weathering Turbulent Times.
Prediction for the impact on the basis : 1. Suppose a summer drought destroys much of this year's wheat harvest. What would be your prediction for the change in the basis, F - S?

Reviews

Write a Review

Management Theories Questions & Answers

  Learning in action

Learning contract proposal that will form the basis of your learning contract report.

  Change is the only constant

"Change is the only constant " Evaluate the different types of change that have occurred in Sony.

  How do advertisers try to use group influence

How do advertisers try to use group influence?  Will you find any specific examples and explain the relevant theory of group behavior and influence?

  Case study:saving sony

You have been appointed by Sony as a consultant on change management. Advise Sony on how they could implement the change by using the various theories of change you have learnt.

  How the stock market works

The purpose of this project is to help you to gain an understanding of how the stock market works and of the relationship between theory and practice.

  Find the optimal production quantities

Find not only the optimal production quantities, but also the optimal total cost.

  Describe the management process

Describe the management process and identify the skills required to manage business organizations.

  Case study : bert''s bonsai and aquatic sport museum

Case Study : Bert's Bonsai and Aquatic Sport Museum Prepare a knowledge management system.

  Knowledge management techniques

Demonstrate understanding of the many-sided nature of knowledge management

  Theory of transtheoretical model

Demonstrate understanding of the many-sided nature of knowledge management

  Write a paper on historical trends of management

Write a paper on Historical Trends of Management.

  Theory of reasoned action

Theory of Planned Behavior and Integrated Behaviors Model

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd