market exists for hedging purposes. We show that imposing the background risk, be it additive or multiplicative, on the firm … has no effect on the separation theorem. The full-hedging theorem, however, holds if the background risk is independent of …This paper examines the behavior of the competitive firm under correlated price and background risk when a futures …

against some of them, firms may apply hedging, i.e. use of derivative instruments. This paper focus on the problem of using …Company operating in current economic conditions are exposed to a series of different kinds of risk. In order to secure … derivatives for the needs of reducing market risk, based on the example of KGHM Polska Miedź SA and PGNiG SA. …

To study the impact of counter-party default risk of forward contracts on a firm’s production and hedging decisions, I … use a model of a risk-averse competitive firm under price uncertainty. I find that if expected profits from forward … contracts are zero, the hedge ratio is not affected by default risk under general preferences and general price distributions …

In this paper, we examine the interaction among the investment, production and hedging decisions. In so doing, we …

in production, the optimal production decisions are different between a risk-neutral firm and a risk-averse firm, i ….e., the separation result does not hold. Moreover, flexibility in production implies only partial hedging with an actuarially …A risk-averse firm faces uncertainty about the spot price of the output, but has access to a futures market. The …

show that the firm's optimal production and hedging decisions depend crucially on the degree of forward market … forward contracts. In the case that the price risk cannot be directly managed by financial hedging, we construct a reasonable … incompleteness, and on the correlation structure of the price and exchange rate risk. The separation theorem holds if there are …

This paper studies the impact of counter-party default risk of forward contracts on a firm's production and hedging … decisions. Using a model of a risk-averse competitive firm under price uncertainty, it derives several fundamental results. If … expected profits from forward contracts are zero, the hedge ratio is surprisingly not affected by default risk under general …

We analyze risk management trends in electricity commodity markets using the production and transaction data and … electricity production using the power derivatives available at NASDAQ OMX Commodities. In their hedging policy, these companies … that the derivative cashflows constitute substantial profits for these companies. Furthermore, hedging contributes to …

India’s financial system compares favorably internationally, but rising credit risk and liquidity pressures are …