Solved: To hedge its profits from fluctuations in coffee prices, Finance Basics

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To hedge its profits from fluctuations in coffee prices

Suppose Starbucks consumes 80 million pounds of coffee beans per year. As the price of coffee rises, Starbucks expects to pass along 40% of the cost to its customers through higher prices per cup of coffee. To hedge its profits from fluctuations in coffee prices, Starbucks should lock in the price of how many pounds of coffee beans using supply contracts?

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Finance Basics: To hedge its profits from fluctuations in coffee prices

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Finance Basics: To hedge its profits from fluctuations in coffee prices

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