Which of the Following Is a Common Use of Weather

question 7

Multiple Choice

Which of the following is a common use of weather derivatives?

• A) Hedge the volume of electricity that will be demanded by customers in the summer
• B) Hedge the price of oil that must be purchased in the winter
• C) Hedge the price of electricity that must be purchased in the summer
• D) Hedge the price and volume of gas that must be purchased for heating in the winter

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Definitions:

Allocating Resources

The process of distributing available assets, including time, money, and manpower, among various projects or departments to achieve organizational goals efficiently.

Performance Measurement

The process of evaluating the efficiency and effectiveness of actions or operations within an organization.

Valuation

The process of determining the current worth of an asset or a company.

Capital Costs

Expenses incurred to create or acquire a fixed asset, such as buildings and equipment, that are not charged to expense in the period purchased but are depreciated over their useful life.