Hedgers Enter Commodity Futures Contracts Because the Contracts Offer Leverage

question 25

True/False

Hedgers enter commodity futures contracts because the contracts offer leverage.​

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Definitions:

Society of Worldwide Interbank Financial Telecommunications

An international organization that provides a network for financial institutions globally to send and receive information about financial transactions.

Client Accounts

Financial accounts held by a financial institution on behalf of its clients, often used for the safekeeping of money, securities, or other assets.

Unbalanced Value Flow

A situation in a business process where the value output is not proportional to the value input, leading to inefficiencies or waste.

Potential Risk

The possibility of a negative event occurring, which could lead to harm or loss.