2. Hedging with Futures (LO4, CFA2) Kelloggs uses large quantities of corn in its breakfast cereal operations.
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2. Hedging with Futures (LO4, CFA2) Kellogg’s uses large quantities of corn in its breakfast cereal operations. Suppose the near-term weather forecast for the corn-producing states is droughtlike conditions, so corn prices are expected to rise. To hedge its costs, Kellogg’s decides to use the Chicago Board of Trade corn futures contracts. Should the company be a short hedger or a long hedger in corn futures?
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ISBN: 9781260013979
9th Edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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