A Miller Can Hedge the Price Risk on Wheat by Taking

question 97

Multiple Choice

A miller can hedge the price risk on wheat by taking one of the following positions.

• A)Buying put options on wheat.
• B)Selling call options on wheat.
• C)Buying wheat futures.
• D)Selling wheat futures.

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Definitions:

Resale Value

The amount of money that an asset will be sold for at some point in the future.

F Test

A statistical test used to compare the variances of two populations or to test the equality of two or more means in the context of variance.

Predictor Variables

Independent variables in statistical models that are used to predict outcomes of dependent variables.

Resale Value

The expected amount of money that an asset or property will sell for at a future point in time, considering depreciation and market conditions.