scholarly journals Stochastic Dominance Analysis of Futures and Option Strategies for Hedging Feeder Cattle

1998 ◽  
Vol 27 (2) ◽  
pp. 270-280 ◽  
Author(s):  
R. Wes Harrison
Keyword(s):  
United States ◽  
Stochastic Dominance ◽  
The United States ◽  
Futures Contracts ◽  
Risk Averse ◽  
Feeder Cattle ◽  
Futures Contract ◽  
Risk Return ◽  
Put Option ◽  
Option Strategies

Stochastic simulation and generalized stochastic dominance are used to compare the risk-return properties of the Chicago Mercantile Exchange feeder cattle futures contract with those of the feeder cattle put option contract. Cash marketing, futures, and option strategies are analyzed for four backgrounding systems common to the mid-south region of the United States. The results show that at-the-money put option strategies dominate corresponding futures contract strategies according to generalized stochastic dominance. This implies that at-the-money put option contracts are superior to feeder cattle futures contracts for risk-averse backgrounders in the mid-south region of the United States.

scholarly journals Analysis of the Risk Management Properties of Grazing Contracts Versus Futures and Option Contracts

1996 ◽  
Vol 28 (2) ◽  
pp. 247-262 ◽  
Author(s):  
R. Wes Harrison ◽  
Barry W. Bobst ◽  
Fred J. Benson ◽  
Lee Meyer
Keyword(s):  
Risk Management ◽  
Stochastic Dominance ◽  
Risk Averse ◽  
Integrated Production ◽  
Feeder Cattle ◽  
Option Contracts ◽  
Put Option ◽  
Price Risks

AbstractA stochastic budget simulator and generalized stochastic dominance are used to compare the risk management properties of grazing contracts to futures and option contracts. The results show that the risks of backgrounding feeder cattle are reduced significantly for pasture owners in a grazing contract. However, the risks of the cattle owner in a grazing contract are not significantly reduced. The results also show that generally risk averse pasture owners prefer grazing contracts to integrated production when traditional hedging is used to manage price risks. In addition, grazing contracts compare favorably with put option contracts for some pasture owners.

AGRICULTURAL FINANCE REVENUE FUTURES CONTRACT

2004 ◽  
Vol 07 (02) ◽  
pp. 85-99 ◽  
Author(s):  
MARTIAL V. GUINVARC'H ◽  
JACQUES JANSSEN ◽  
JEAN E. CORDIER
Keyword(s):  
Risk Management ◽  
Crop Yield ◽  
Management Strategy ◽  
Financial Intermediation ◽  
Futures Contracts ◽  
Financial Intermediary ◽  
Agricultural Finance ◽  
Futures Contract ◽  
Put Option

To respond to financial compound risk of farmers, two multiplicative derivative contracts, called respectively revenue futures contract and revenue put option, are proposed. The paper presents the theoretical management strategy of such a contract under the constraint that price and crop yield futures contracts are quoted. A financial intermediary can thus develop a risk-free management strategy to build a revenue futures contract. This paper opens perspectives on risk management for farmers, on completeness of markets and on new financial intermediation.

scholarly journals Bowman’s Risk-Return Paradox: Evidence From Eastern Countries

2021 ◽  
Vol 16 (1) ◽  
pp. 244-254
Author(s):  
Ngoc Cau Nguyen ◽  
Wei Ning ◽  
Albi Alikaj
Keyword(s):  
United States ◽  
Prospect Theory ◽  
United States Of America ◽  
The United States ◽  
Conventional Wisdom ◽  
Cross Sectional ◽  
Risk And Return ◽  
Risk Return ◽  
Longitudinal Associations ◽  
Generally True

Abstract While conventional wisdom has stated that greater risks typically bring greater rewards, many studies have shown that this is not generally true for the financial state of firms. This paradox, known as Bowman’s paradox has motivated studies to examine this relationship across different industries, periods, and nations. However, most of these studies have focused on Western countries such as Belgium and the United States of America. Therefore, this paper contributes to the literature by investigating the generalizability of Bowman’s paradox and prospect theory across three distinct Eastern countries. Data is collected from 10,623 firms located in China, Japan, and Vietnam. Cross- sectional and longitudinal associations between risk and return provided general support for Bowman’s paradox and prospect theory for the three Eastern countries. The results indicate that there is a general negative risk-return relationship for firms in these countries. Further analyses show that this relationship is stronger for firms performing below the industry median. This might suggest that firms that are in trouble usually take more risks. This relationship is strongest for firms in Japan, followed by firms in China and Vietnam, respectively.

scholarly journals Trust, Risk and Public History: A View from the United States

2010 ◽  
Vol 17 ◽  
pp. 52-61 ◽  
Author(s):  
James B. Gardner
Keyword(s):  
United States ◽  
Risk Taking ◽  
Public History ◽  
The United States ◽  
Risk Averse ◽  
Historical Knowledge ◽  
Safe Place ◽  
The Public ◽  
Difference Of Opinion

In the public history and museum communities today there is much difference of opinion over the concept of ‘radical trust,’ which basically argues for us to give up control and trust the public to develop content for our websites and exhibitions and provide direction for our work. Most public historians and curators are happy to share authority with the public, but are we now expected to yield all authority? Are we now taking historian Carl Becker’s well-known phrase ‘everyman his own historian’ and updating it to ‘every person his or her own curator’? What is the role of historical knowledge in a world of opinion? Unfortunately, at the same time that many of us are embracing risk online, in a world we have little control or even influence over, we seem to be stepping back from risk taking in our museums, on our own turf. We’ve become risk averse—afraid to make mistakes, afraid of trying new approaches and tackling the historically controversial or the ambiguous. Rather than the ‘safe place for unsafe ideas’ that Elaine Gurian proposed, we have become no more than safe places for safe ideas. We need to push back on both fronts. Public historians should be thought leaders, not followers—not wait to see what the future holds for us but rather try to shape that future.

scholarly journals Economic Evaluation of an Alternative Marketing System For Feeder Cattle in Alabama

1981 ◽  
Vol 13 (2) ◽  
pp. 85-89 ◽  
Author(s):  
Gregory M. Sullivan ◽  
Daniel A. Linton
Keyword(s):  
United States ◽  
Economic Evaluation ◽  
Structural Changes ◽  
The United States ◽  
Marketing Channels ◽  
Market Information ◽  
Marketing System ◽  
Vertical Coordination ◽  
Feeder Cattle ◽  
Decentralized Markets

The marketing system for cattle in the United States has evolved with shifts from delivery to large terminal centers, to more decentralized markets. Because of innovations in transportation and processing technology, these structural changes have created a need for greater vertical coordination between different stages in the cattle marketing channels (Rhodes, p. 174; Sporleder, p. 101). Improved coordination requires appropriate market information about product supplies and the form of cattle preferred by buyers (Purcell, 1973, 1980).

scholarly journals Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States: Comment

2010 ◽  
Vol 100 (1) ◽  
pp. 628-633 ◽  
Author(s):  
Gary E Bolton ◽  
Axel Ockenfels
Keyword(s):  
United States ◽  
Risk Taking ◽  
The United States ◽  
Risky Choice ◽  
The Other ◽  
Binary Choice ◽  
Risk Averse ◽  
Personal Risk ◽  
Risky Option ◽  
Betrayal Aversion

In a series of binary choice problems, we investigate how a chooser's risk taking changes when others share in their personal risk, either equally or unequally. We find that when the safe option yields inequality, the risky option is taken significantly more often. On the other hand, the inequality resulting from the risky choice does not affect risk taking. We also find that choosers tend to be less risk-averse in a one-person context compared to when the risk also affects the payoff of another. (C72, D81, Z13)

scholarly journals INVESTIGATING THE IMPACT OF HEDGE HORIZON UPON HEDGING EFFECTIVENESS: EVIDENCE FROM NATIONAL STOCK EXCHANGE OF INDIA

2019 ◽  
Vol 18 (2) ◽  
pp. 131
Author(s):  
MANDEEP KAUR ◽  
KAPIL GUPTA
Keyword(s):  
Variance Reduction ◽  
Direct Relationship ◽  
Stock Exchange ◽  
Futures Market ◽  
Futures Contracts ◽  
Risk Averse ◽  
Risk Return ◽  
Hedging Effectiveness ◽  
The Impact ◽  
Reduction Approach

Present study attempts to investigate the impact of hedge horizon upon hedging effectiveness in Indian equity futures market by comparing hedging performance of near, next and far month futures contracts of NIFTY50 index and its 17 composite stocks. Hedging effectiveness has been measured using two approaches, namely, Variance Reduction approach and Risk-Return approach. The study finds that near month futures contracts are most effective when hedge effectiveness is measured using variance reduction approach, whereas, on the other hand, far month futures contracts are found to be most effective using risk-return approach. These results imply that for highly risk-averse investors (concerned with only minimization of risk), near month futures contracts enable effective hedging, whereas for less risk-averse investors (concerned with risk as well as return), far month futures contracts offer superior hedge effectiveness. The study also finds that coefficient of correlation between spot and futures returns is a significant factor affecting variance reduction of returns and bears direct relationship with it.

scholarly journals Risk attitude and fraud detection: A Malaysian case

2011 ◽  
Vol 8 (2) ◽  
pp. 247-251
Author(s):  
Nahariah Jaffar ◽  
Norhazlin Ismail ◽  
Hway-Boon Ong
Keyword(s):  
United States ◽  
United Kingdom ◽  
Experimental Approach ◽  
Risk Attitude ◽  
Financial Statements ◽  
The United States ◽  
Risk Averse ◽  
External Auditors ◽  
Fraud Risk ◽  
Risk Taker

Fraud is an important issue in many countries such as in the United States, United Kingdom, including of Malaysia. Malaysian Approved Auditing Standards, AI 240 “Fraud and Error” was established to provide guidance on the auditor’s responsibility to consider fraud and error during the audit of financial statements. The auditors are required to appropriately assess fraud risk during the planning of the audit work so that they can provide reasonable assurance that any material misstatement in the financial statements has been detected. If the external auditors are not able to detect fraud, this may expose them to litigation. The present study aims to examine whether risk attitude has an effect on the external auditors’ ability to detect the likelihood of fraud. An experimental approach is adopted by sending case materials to audit partners and audit managers attached to auditing firms operating in Malaysia. The result shows that means difference exists on the ability to detect the likelihood of fraud between the external auditors who are risk averse and those who are risk taker.

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