Now assume that the output quantity is uncertain. How does the correlation between output and prices affect Carter’s decision on how much to hedge? Prepare your analysis showing hedging decisions for correlations of -.99, 0, and .99.
Now assume that the output quantity is uncertain. How does the correlation between output and prices affect Carter’s decision on how much to hedge? Prepare your analysis showing hedging decisions for correlations of -.99, 0, and .99.
