A Producer That Is Worried About the Future Price That

question 117

Multiple Choice

A producer that is worried about the future price that will be available when the product is to be sold can hedge this price risk by:

• A) buying a futures contract.
• B) selling a futures contract.
• C) buying a put option.
• D) selling a call option.

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Definitions:

Debris Flow

A rapid downhill movement of a mixture of water, rock, soil, and organic matter, often triggered by heavy rain.

Rock Avalanche

A rapid, massive descent of rock debris and soil down a slope, often without a clear water component.

Sedimentary Layers

Strata or beds of sedimentary rock that have been deposited over time, often horizontally.

Volcanic Eruption

The explosive release of magma, ash, and gases from a volcano, affecting its surrounding areas.