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Kelly works for a plastics company as a risk manager. Kelly had used crude oil futures a cross hedge because plastic prices and crude oil
Kelly works for a plastics company as a risk manager. Kelly had used crude oil futures a cross hedge because plastic prices and crude oil prices were highly correlated in the past. Unfortunately, plastic prices have been very volatile lately and the hedge has severely underperformed, generating very high costs to the company. a. What assumptions with respect to the hedge ratio might Kelly change to get a better hedge? b. Kelly's annual review is also coming up soon. What should Kelly tell her boss about cross hedging to keep from being fired
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