A Producer That Is Worried About the Future Price That

question 117

Multiple Choice

A producer that is worried about the future price that will be available when the product is to be sold can hedge this price risk by:

• A) buying a futures contract.
• B) selling a futures contract.
• C) buying a put option.
• D) selling a call option.

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Definitions:

Canada Post

The primary postal operator in Canada, responsible for the collection, sorting, transportation, and delivery of mail and packages across the country and internationally.

Disbursement Float

The time lag between when a payment is issued by a company and when the funds are actually removed from the company’s account.

Chequing Account

A bank account that allows the holder to make deposits, withdrawals, and payments via cheques and is typically used for everyday transactions.

Paycheque

A check issued to an employee for earned wages, representing the net amount after deductions such as taxes and social security contributions.