Discuss whether hedging is beneficial for USC Airlines.
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Assume that you were approached by the CFO of USC Airlines, an established hypothetical airline, in your capacity as a Risk Analyst who is familiar with Derivatives products. The CFO is debating the effectiveness and business viability of hedging jet fuel and is seeking your • advice. Her opinion is mainly driven by an international report that shows that not all airlines hedge jet fuel.
Question 7: (250 words)
The CFO is concerned about the strategic decisions of competing airlines. Airline fuel s a significant operating expense to airlines in general and may have significant price volatility. At the same time
hedging using futures might be quite costly.
Given the statement above. Discuss whether hedging is beneficial for USC Airlin s.
You are expected to use various resources to justify the points you raise in answering question_-1,-4Yo must provide a reference list at the end of the report and use inline citations which include the pa number of each resource used.
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