A Producer That Is Worried About the Future Price That

question 98

Multiple Choice

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

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

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Definitions:

Economic Security

Refers to the condition of having stable income or other resources to support a standard of living now and in the foreseeable future.

Democratic Process

The methods and procedures by which democratic societies make decisions, often involving participation through voting, representation, and respect for pluralism and individual rights.

Fair Treatment

The concept of treating all individuals equally, with respect and justice, without discrimination or bias in various contexts such as legal, workplace, and social interactions.

Bureau of Labor Statistics

A unit of the United States Department of Labor, responsible for collecting and analyzing labor market activity, working conditions, and price changes in the economy.