Futures Contracts Reduce Future Uncertainty

question 71

Multiple Choice

Futures contracts reduce future uncertainty. Which of the following statements show how this is achieved? I. Futures contracts allow the parties involved to mitigate possible shortages in quantities of the good. II. Futures contracts allow the parties involved to mitigate unexpected changes in price that could hurt earnings. III. Futures contracts always allow the seller to receive a price that is higher than the market price for the product.

• A) I and II only
• B) I only
• C) I and III only
• D) I, II, and III

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