How Can Selling a Futures Contract Mitigate Agricultural Risk for Farmers

question 202

Multiple Choice

How can selling a futures contract mitigate agricultural risk for farmers?

• A) Farmers can grow crops that are not subject to weather inclemency.
• B) Farmers can pin down a price for their produce even if there is volatility in market prices.
• C) Futures contracts allow farmers to store their grains in silos until the market prices rise.
• D) Futures contracts allow farmers to trade in crops whose prices will fall in the future.

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Definitions:

Granting Claims

The process of approving requests or demands, often in legal, insurance, or benefits contexts.

Requests For Adjustment

Appeals or petitions for a change or modification in a service, product, or agreement, often due to dissatisfaction or a change in needs.

Customer Fault

A situation where an issue or problem with a product or service is due to the actions or inactions of the customer.

Logical Sequence

The orderly and consistent progression of ideas or events, typically ensuring that each point or step follows naturally from the previous one.