You Are the Purchasing Agent for a Cookie Company

question 176

Multiple Choice

You are the purchasing agent for a cookie company. You anticipate that your firm will need 15,000 bushels of oats in March. You decide to hedge your position today and did so at the closing price of the day. Assume that the actual market price turns out to be 261´0 on the day you actually buy the oats. How much more would you have spent or saved if you had not taken the hedge position?

Oats - 5,000 bu.: cents per bu.

• A) Spent $15 more.
• B) Spent $150 more.
• C) Saved $15.
• D) Saved $150.
• E) Saved $1,500.

---

Definitions:

Plymouth Colony

An early settlement established in 1620 by English Puritans in present-day Massachusetts, known for the celebrated Thanksgiving feast.

Mayflower Compact

An agreement reached by the Pilgrims on the Mayflower in 1620, establishing self-governance in Plymouth Colony.

Civil Government

The branch of government concerned with the administration of the state, including the implementation and enforcement of laws and the management of public affairs.

Literacy

The ability to read and write, often considered a fundamental skill for accessing education and participating fully in society.