The Importance of Financial Leverage and Risk Aversion in Risk-Management Strategy Selection

Brent A. Gloy and Timothy Baker ()

American Journal of Agricultural Economics, 2002, vol. 84, issue 4, 1130-1143

Abstract: The problem of choice among risk-management strategies is addressed with the stochastic dominance with a risk-free asset (SDRA) criteria. The SDRA criteria consider all possible combinations of the strategies and financial leverage. This allows for strategies with less business risk, less expected return, and greater leverage to dominate strategies with greater business risk and greater expected return. Results show that the inclusion of the risk-free asset significantly improves the discriminatory power of the ordinary stochastic dominance criteria for the case of risk-management strategies. Copyright 2002, Oxford University Press.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://hdl.handle.net/10.1111/1467-8276.00373 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: THE IMPORTANCE OF FINANCIAL LEVERAGE AND RISK AVERSION IN RISK MANAGEMENT STRATEGY SELECTION (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:84:y:2002:i:4:p:1130-1143

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().