How Might a Firm Such as General Mills Use Options

question 45

Multiple Choice

How might a firm such as General Mills use options to control raw material prices for breakfast cereals?

• A) Buy call options on commodities
• B) Sell call options on commodities
• C) Buy put options on commodities
• D)Sell put options on commodities

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Definitions:

Present Concern

Current issues or worries that are relevant or impacting an individual or group at the moment.

Behavioral Economists

Experts who investigate the impact of mental, cognitive, emotional, cultural, and social aspects on the financial decision-making of people and institutions.

Marathon Performance

The outcomes or results achieved by individuals or groups in the context of a long-distance running event, typically 26.2 miles.

Precommitments

Binding agreements made in advance to restrict future actions or decisions, often used in behavioral economics to help individuals stick to long-term goals.