One Difference Between a Hedger and a Speculator Is That

question 36

Multiple Choice

One difference between a hedger and a speculator is that the hedger:

• A) may experience either a profit or a loss.
• B) may not close out his position by taking an opposite position.
• C) does not have to put up margin.
• D) faces a risk without the futures contract.

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Definitions:

Sales Returns

Transactions where customers return purchased goods, leading to a reversal of sales revenue and potentially reflecting on customer satisfaction or quality issues.

Sales Discounts

Reductions in the price of goods or services offered to customers to encourage prompt payment.

Net Sales

The amount of revenue generated by a company after accounting for returns, allowances, and discounts.

Unadjusted Trial Balance

A preliminary list of all accounts with their balances before any adjustments are made for the end of the accounting period.