Which of the Following Accurately Describes Possible Positions Taken by Hedgers

question 100

Multiple Choice

Which of the following accurately describes possible positions taken by hedgers?

• A) may take a short position in the futures market to offset a long position in the spot market
• B) may take a short position in the spot market to offset a long position in the futures market
• C) may take a long position in the spot market to offset a short position in the futures market
• D) may take a long position in the futures market to offset a long position in the spot market

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Definitions:

Accounts Payable

Short-term debts or obligations a company owes to its suppliers or creditors for goods and services received.

Sales Returns and Allowances

Deductions from a company's sales revenue that account for returned goods and discounts or allowances given to customers.

Purchase Discounts

Reductions in the purchase price of goods, services, or assets, usually offered as an incentive for prompt payment.

Sales Returns and Allowances

A reduction in sales revenue due to returned goods or allowances made for damaged or unsatisfactory products.