Question
4. Hyundai Motors plans to sell 10000 units of a new model of Genesis in 2024, that is, 2 years from now. To produce one
4. Hyundai Motors plans to sell 10000 units of a new model of Genesis in 2024, that is, 2 years from now. To produce one unit of a car, the company has to buy one unit of steel. Both the future prices of a new car and steel are uncertain.
Suppose the standard deviation of the future price of a new model of Genesis is 20%, the standard deviation of the future price of steel is 15%, and the correlation between the two prices is 0.4. In this case, how many forward contracts on the steel does Hyundai Motors have to buy or sell to minimize the risk associated with both the input and output prices?
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Not For Profit Entities Audit And Accounting Guide
Authors: AICPA
1st Edition
1937351971, 978-1937351977
