Selling a Futures Contract May Be Appropriate for One Who

question 80

Multiple Choice

Selling a futures contract may be appropriate for one who wishes to:

• A) lock in a future sales price.
• B) lock in a future purchase price.
• C) speculate that future spot prices are going down.
• D) have a ready market in which to sell product.

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Definitions:

Additional Benefit

An additional benefit refers to extra advantages or perks that come from using a product or engaging in an activity, beyond the primary gains.

Additional Cost

The extra cost that is incurred when an economic agent decides to increase the level of an activity or purchase.

Labor Market

The marketplace in which individuals offer their labor for employment and employers seek to hire labor to fill available positions.

Resource Market

The market where resources or inputs such as labor, capital, and raw materials are bought and sold.