The Theoretical Effects of Farm Policies on Optimal Leverage and the Probability of Equity Losses

• DOI: 10.2307/1241495
• Publication Date: 2006-07-05T08:14:28Z
• Authors: Allen M. Feathers...; Charles B. Moss; Timothy G. Baker; Paul V. Preckel
• Keywords: Leverage (statistics); Equity; Leverage effect

Abstract The degree to which the use of debt is increased in response risk‐reducing and income‐augmenting farm policies studied theoretically. A mean‐variance model used determine optimal leverage adjustment, then effects on cumulative probability earning very low rates return equity are examined. evidence suggests that induce a large enough increase financial farmers having negative returns equity.