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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