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A Farmer Has a Long Position in Barley and Hedges

question 41

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A farmer has a long position in barley and hedges it with a short position in wheat. Which one of the following terms applies to this situation?


Definitions:

Expiration Time

The specific date and time when an option, futures contract, or similar financial instrument becomes void and ceases to trade.

Exercise Price

The price at which the holder of an option can buy or sell the underlying security.

Cash Dividends

Payments made by a corporation to its shareholder members. It denotes the distribution of a portion of the company's earnings.

Home Mortgage Securitization

The process of bundling home loans into securities that are then sold to investors.

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