A Hedger Buys a Futures Contract That Obligates the Owner

question 112

Multiple Choice

A hedger buys a futures contract that obligates the owner to take delivery of 5,000 bushels of wheat at a price of $3.30 per bushel.At expiration the spot price of wheat is $2.80 per bushel.The hedger has:

• A)saved 50¢ per bushel through hedging.
• B)gained peace of mind at a price of 50¢ per bushel.
• C)the opportunity to avoid taking delivery, since price declined.
• D)locked in an effective price of $3.05 per bushel.

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Definitions:

Production Foreperson

A supervisory role within manufacturing or production environments, responsible for overseeing workers and ensuring that operations run smoothly and efficiently.

Unintentional Forgetting

The process by which information is lost from memory without the intent to forget, often due to factors like lack of attention or encoding failure.

Stress And Frustration

Emotional states resulting from obstacles or challenges that impede goals or desires.

Perceptions

The way in which something is regarded, understood, or interpreted by individuals based on their sensory experiences and cognitive processes.