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Assume that you work for an airline, which heavily relies on fuel. Please write down the profit function including Fixed Cost (FC), Variable Cost (VC),
- Assume that you work for an airline, which heavily relies on fuel.
- Please write down the profit function including Fixed Cost (FC), Variable Cost (VC), Revenues and Spot Price of oil (ST) if the company does not hedge. Assume that FC=$250, VC=$150, Revenues=$500.
- If the company hedges by using forward contract (F0,T), how will the profit change? Please write down the profit function. Assume F0,T=$75
- Calculate the profits for the hedged and unhedged positions for the following spot prices: ST=$50, $75, $100, $125
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The Selected Works Of George J. Benston Banking And Financial Services Volume 1
Authors: James D. Rosenfeld
1st Edition
0195389018, 0199745471, 9780199745470
