A Hedger Buys a Futures Contract That Obligates the Owner

question 44

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 $3.80 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:

Myers-Briggs

A type of personality test based on the theories of Carl Jung, designed to identify individual psychological preferences in how people perceive the world and make decisions.

Judging Type

A personality characteristic that indicates a preference for structure, planning, and orderliness in decision-making and lifestyle.

Task Calendar

A tool or system used for scheduling, tracking, and managing tasks and projects over days, weeks, or months, helping individuals and teams stay organized and meet deadlines.

Selective Perception

The process by which individuals perceive what they want to in media messages while ignoring opposing viewpoints, based on their background, attitudes, and biases.