What Form of Insurance Would You Suggest for a Producer

question 35

Multiple Choice

What form of insurance would you suggest for a producer that wishes to be protected from future price decreases but wants to benefit from any future price increases?

• A) Buy a call option on the asset
• B) Sell a call option on the asset
• C) Buy a put option on the asset
• D) Sell a put option on the asset

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Definitions:

Passive Transport

The movement of substances across a cell membrane without the need for energy input, typically along the concentration gradient.

Plasma Membrane

The lipid bilayer membrane surrounding cytoplasm of a cell, regulating the passage of substances in and out of the cell.

Water-soluble Ions

Ions that dissolve in water, important in biological processes and the functioning of cells.

Lipid-soluble Molecules

Molecules that can dissolve in fats and oils, which allows them to easily pass through cell membranes that are made of lipids.