Description
Because of the regulatory environment in the railroad industry, J&L Railroad’s profitability is dependent upon the price of diesel fuel. In this case, the student must decide how much of next year’s expected fuel demand should be hedged and how it should be hedged. Hedging alternatives include exchange-traded futures and options as well as commodity swaps, and collars offered by the risk management group of a bank. The recommendations of the CFO are laid out in UVA-F-1605.
Publishing Authority:
Darden Business Publishing – University of Virginia
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