This note examines the behavior of a competitive firm that faces joint price and inflation risk. Given that the price risk is negatively correlated with the inflation risk in the sense of expectation dependence, the firm optimally opts for an overhedge if the firm's coefficient of relative risk...

International and national investors are often exposed to real wealth risks, stemming from volatile asset prices and inflation uncertainty, making it difficult to stabilize consumption patterns. However, investors can enter futures markets to hedge against these risks. The paper develops a...

We present a model of a risk-averse exporting firm subject to exchange rate risk. The firm enters an unbiased currency futures market to hedge its exchange rate risk exposure. In the real world there are other ways of evading uncertainty, the most common are holding of inventories. We...

This paper presents a model of a competitive risk averse exporting firm under exchange rate uncertainty. If forward market contracts are available neither the distribution parameters of the exchange rate nor the degree of the firm's risk aversion have any impact on the export level. But this...