| Course | MGMT 8605M Financial Risk Management and Decision Making for Organizations |
|---|---|
| Week | Week 8 |
| Paper type | Decision brief |
| Length | About 600 words, 5 pages |
| Format | APA 7 student paper |
| School | Walden University |
| Program | PhD in Management |
| Updated | October 2026 |
Free sample paper for MGMT 8605M Week 8
How Many Bushels to Carry Past December: A Two-Page Decision Brief for a Grain Cooperative's General Manager on Stored-Corn Basis Exposure, Stating the Number, the Assumption It Rests On, What It Leaves Out and Three Options in One Format
Student Name
Walden University
MGMT 8605M: Financial Risk Management and Decision Making for Organizations
Instructor Name
Month Day, Year
How Many Bushels to Carry Past December: A Two-Page Decision Brief for a Grain Cooperative's General Manager on Stored-Corn Basis Exposure, Stating the Number, the Assumption It Rests On, What It Leaves Out and Three Options in One Format
The Decision
To: General Manager, Four Rivers Grain Cooperative. Date: October 12, 2026. Decision: how many of the cooperative's 6 million bushels of stored corn to carry unsold past December, while the local cash price sits at an unusually wide discount to the December futures contract.
The Number
[after]
The ten-year range comes from the cooperative's own daily posted bids since 2016. The current basis sits near the wide end of that range, which is why carrying grain looks attractive: if basis narrows toward its usual spring level, stored grain gains value relative to futures.
Table 1
The Exposure in One Line
| Measure | Value | |
|---|---|
| Margin effect of a 5-cent change in local basis, across 6 million stored bushels | $300,000 | |
| Current local basis, cash price minus December futures | minus $0.82 per bushel | |
| Ten-year range of the cooperative's October basis | minus $0.95 to minus $0.31 per bushel | |
The Assumption the Number Depends On
The figure assumes the stored corn is hedged with futures, so that changes in the futures price itself are offset and only the basis, the gap between local cash and futures, affects margin. The cooperative's hedge policy requires this, and the books show 5.8 million of the 6 million bushels currently hedged. If the hedge were lifted, the exposure would include the full corn price, and every 5-cent move in futures would add another $300,000 swing, with futures moving far more than basis in a typical season.
What the Number Leaves Out
The figure leaves out two things. First, margin calls: a rise in futures prices would require cash deposits on the short futures position before the stored grain is sold, and in 2022 the cooperative drew on its credit line to meet them. Froot et al. (1993) argued that hedging adds value by preserving internal funds for planned investment, and a hedge that itself demands cash at the wrong moment can undercut that purpose. Second, the chance that farmers default on forward contracts if prices move sharply, which would change the cooperative's physical position.
Three Options in One Format
Accept: carry all 6 million bushels into spring. Remaining exposure: $300,000 per 5 cents of basis, with expected gain if basis narrows to its ten-year spring average.
Reduce: sell 3 million bushels by December and carry 3 million. Remaining exposure: $150,000 per 5 cents, with half the expected gain and half the margin-call risk.
Transfer: sell 4 million bushels forward to an ethanol plant under a basis contract fixing the spring basis at minus $0.45, and carry 2 million unhedged on basis. Remaining exposure: $100,000 per 5 cents, with the basis gain on the forward bushels locked in.
Recommendation and What Would Reverse It
The analysis favors the transfer option. It captures most of the expected basis gain at a known price while cutting the exposure by two-thirds, and the ethanol plant's bid of minus $0.45 is near the cooperative's spring average. Stulz (1996) argued that firms should manage risk to avoid costly lower-tail outcomes rather than to eliminate all variability, which fits a choice that keeps some upside. The preference would reverse if the ethanol plant's credit weakened, or if the futures spread for March over December widened enough that carrying all bushels earned more than the forward basis. Hull (2022) explains how the futures spread, not only the basis, sets the return to storage.
References
Froot, K. A., Scharfstein, D. S., & Stein, J. C. (1993). Risk management: Coordinating corporate investment and financing policies. Journal of Finance, 48(5), 1629-1658. https://doi.org/10.1111/j.1540-6261.1993.tb05123.x
Hull, J. C. (2022). Options, futures, and other derivatives (11th ed.). Pearson.
Stulz, R. M. (1996). Rethinking risk management. Journal of Applied Corporate Finance, 9(3), 8-25. https://doi.org/10.1111/j.1745-6622.1996.tb00295.x
MGMT 8605M Week 8 instructions, in plain terms
Week 8 asks for a decision brief of about two pages for one manager. State the decision in the first sentence. Give the exposure as one number with its unit, and the historical range that puts it in context. Name the single assumption the number depends on most, and state what the number leaves out before presenting options. Present the options, typically accept, reduce and transfer, in the same format, each with the exposure remaining afterward. Close with the option the analysis favors and the development that would reverse that preference. Qualifications belong inside the two-page limit, not in an appendix. Write for a reader with ten minutes. Cite where the historical range comes from.
Inside the MGMT 8605M Week 8 example
The sample's header names the reader, date and decision. A boxed table gives the exposure per five-cent basis move, the current basis and its ten-year range from the cooperative's own bids. The assumption paragraph explains that the futures hedge removes price risk and leaves basis risk. The omissions paragraph names margin calls, with a reference to the 2022 credit line draw and Froot and colleagues' point about cash at the wrong moment, and forward contract defaults. Three options follow with remaining exposure and expected gain. The recommendation favors a forward basis contract with an ethanol plant, cites Stulz and names two developments that would reverse it. Each option shows the same two fields.
Where the marks sit in the MGMT 8605M Week 8 rubric
Discipline within the page limit carries most of the credit. Briefs that bury the decision, give several competing numbers or push qualifications into appendices score low. Graders look for the decision in the first sentence, one exposure number with its unit and context, the critical assumption named, omissions stated before options and options presented in a consistent format. A recommendation earns its place when it grows out of the options and names what would reverse it. Accuracy about hedging mechanics, such as the difference between price and basis risk, is checked. Brevity, clarity and correct citations complete the Week 8 marks. Options that use different measures cannot be compared and lose marks.
MGMT 8605M Week 8 help from the desk
Decision briefs often grow into reports. Write the first sentence as the decision itself. Pick one number and say what it measures. Ask what single assumption would change that number most and name it. Then list what the number ignores before you list options. Present every option with the same fields so the manager can compare them. Close on the option you prefer and the development that would reverse it. Tutors can help you trim to two pages, and the grain storage brief above fits everything on two pages. Use the organization's own historical data for context where possible. Read it aloud; if any sentence needs explaining, cut or rewrite it.
Get a MGMT 8605M Week 8 example written to your instructions
Decision briefs differ by section in length and in whether an appendix is allowed, so send the Week 8 prompt with its rubric and the analysis the brief compresses; the finished two pages come back within 24-48h, free the first time. Name the decision-maker the brief addresses and the sample is written for that reader.
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MGMT 8605M Week 8 questions, answered
Where can I find a free MGMT 8605M Week 8 sample paper?
Above is the grain cooperative decision brief, the Week 8 sample in full.
What decision does the MGMT 8605M Week 8 brief address?
How many of 6 million stored bushels of corn to carry past December while local basis is unusually wide.
What is the exposure figure?
About $300,000 of margin for each five-cent change in local basis across the stored bushels.
What does the figure leave out?
Margin calls on the futures hedge and the chance that farmers default on forward contracts.
Which option does the brief favor?
Transfer, selling most bushels forward to an ethanol plant at a fixed spring basis and carrying the rest.