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The following diagram is known as a risk profile. It attempts to capture the change in the value of the enterprise (Yaxis), based on the
The following diagram is known as a risk profile. It attempts to capture the change in the value of the enterprise (Yaxis), based on the change in the value of some underlying variable (X axis). In this example, the X axis is the change in the price of wheat and the Y axis is the change in the value of the wheat farm. Which of the following statements would be true with respect to this graph? AV Risk profile SP Select one: a. The steeper the slope of the risk profile line, the less the need for hedging b. A perfectly hedged farm would have a nisk profile that was vertical c. A wheat farmer wanting to hedge the price risk of wheat could short a futures contract in wheat d. All of the above are true e. None of the above are true
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