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:

Dissolution

The process of legally dissolving a company or partnership, ending its existence by winding up affairs, liquidating assets, and distributing the remaining assets or debts to shareholders or partners.

Original Capital

The initial amount of money invested in a business by its owners or shareholders.

Share of Income

The portion of earnings allocated to a shareholder, typically in the form of dividends.

Salaries

Payments made to employees for their services over a specified period, typically expressed on an annual basis.