Hanson’s financial forecast is estimating this year’s revenue to be $40 million. Holden Tank’s Board of Directors are concerned that this year’s corn prices will fall significantly. They wish to use the agricultural options market3 to provide insurance against falling corn prices reducing revenue. How can they do this and how many options should be used?

Essentials of Business Analytics (MindTap Course List)
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Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
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Hanson’s financial forecast is estimating this year’s revenue to be $40 million. Holden Tank’s Board of Directors are concerned that this year’s corn prices will fall significantly. They wish to use the agricultural options market3 to provide insurance against falling corn prices reducing revenue. How can they do this and how many options should be used?

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