A Chocolate Company Which Uses the Futures Market to Lock

question 11

Multiple Choice

A chocolate company which uses the futures market to lock in the price of cocoa to protect a profit is an example of:

• A) a long hedge.
• B) a short hedge.
• C) purchasing futures to guard against a potential loss.
• D) Both a long hedge; and purchasing futures to guard against a potential loss.
• E) Both a short hedge; and purchasing futures to guard against a potential loss.

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Definitions:

Internal Factors

Elements within an organization or individual that affect performance, decisions, and outcomes.

Role Conflicts

Situations where there are contradictory expectations or demands associated with a single role or between multiple roles held by an individual.

Role Ambiguities

Uncertainty faced by individuals when the expectations and responsibilities of their role are not clearly defined.

Role Overloads

A situation where an individual or group faces more responsibilities and tasks than they can manage, often leading to stress or decreased performance.