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.

Distinguish between specific and general statements in sentence construction.

Understand the concept of conciseness and clarity in written communication.

Recognize dynamic and evolving aspects in descriptions.

Illustrate the importance of precise word choice in conveying clear messages.

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Definitions:

Social Scientifically

Pertaining to the use of scientific methods and principles to analyze and understand social phenomena.

Social Dilemmas

Situations in which individual interests are in conflict with collective interests, leading to challenges in decision-making.

Resource Management

The efficient and effective deployment and allocation of an organization's resources when and where they are needed.

Resource Dilemmas

Situations in which individuals or groups face decisions about how to share, distribute, or use limited resources.