Consider an Electric Utility That May Use Either Coal or Natural

question 35

Multiple Choice

Consider an electric utility that may use either coal or natural gas to generate electricity. Under which of the following conditions would it be most valuable to have co-firing equipment? Let a c be the annual standard deviation of coal prices, and let a n be the annual standard deviation of natural gas prices, and p the correlation between coal prices and natural gas prices.

• A) a c high, a n high, p low.
• B) a c high, a n low, p low.
• C) a c low, a n high, p low.
• D) a c low, a n low, p high.

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Definitions:

Ladies' Association

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A political entity that possesses autonomy and independence, recognized by other states as having control over its territory and government.