Suppose that the standard deviation of monthly changes in the price of commodity A is $2 . The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3
The correlation between the futures price and the commodity price is 0.9 . What hedge ratio should be used when hedging a one month exposure to the price of commodity A?
A. 0.60
B. 0.67
C. 1.45
D. 0.90
A
The optimal hedge ratio is 0.9×(2/3) or 0.6.
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A radial tire manufacturer produces products in two departments—Divisions A and B
The company uses separate predetermined overhead allocation rates for each department to allocate its overhead. Divisions A and B have estimated manufacturing overhead costs of $160,000 and $340,000, respectively. Division A uses machine hours as the allocation base, and Division B uses direct labor hours as the allocation base. The total estimated machine hours were 31,000, and direct labor hours were 22,000 for the year. Calculate the departmental predetermined overhead allocation rates. (Round your answer to the nearest cent.) A) Division A-$5.16, Division B-$15.45 B) Division A-$15.45, Division B-$5.16 C) Division A-$7.27, Division B-$10.97 D) Division A-$10.97, Division B-$7.27
Which of the following is a self-actualization need?
a. The need for growth b. The need for protection c. The need for friendship d. The need for recognition