Considering the diagram provided, in the context of project risk management describe and evaluate the technique displayed below.

 

QUESTION 4 Marketing Decision Cash Market Harvest = 137,000 bu. Forward Contract 70,000 bu. @ $5.32 Hedge 70,000 bu. @ $5.52 (-$0.20 basis) P=0.6 P=0.4 P=0.6 P=0.4 P=0.6 P=0.4 Short US Crop Harvest price = $5.65 Normal US Crop Harvest price = $4.62 Short US Crop Harvest price = $5.65 Normal US Crop Harvest price = $4.62 Short US Crop (w/ -$0.15 basis) Harvest price = $5.65 Normal US Crop (w/ -$0.35 basis) Harvest price = $4.62 $774,050 $632,940 $750,950 $681,940 $755,850 $671,440