A Farmer Can Hedge the Risk of Downward Movement in the Price

question 19

Multiple Choice

A farmer can hedge the risk of downward movement in the price of the produce by taking one of the following positions.

• A)Buying a call option.
• B)Selling a put option.
• C)Buying a put option.
• D)Buying a futures contract.

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Definitions:

Behavior

The way in which an individual acts or conducts oneself, especially towards others.

Contingency

A future event or circumstance that is possible but cannot be predicted with certainty, often requiring planning for different potential outcomes.

Antecedent

An event, condition, or cause that logically precedes and influences an outcome or result.

Consequence

The result or effect of an action or condition.