Speculators Differ from Hedgers in the Sense That

question 20

Multiple Choice

Speculators differ from hedgers in the sense that:

• A)Speculators do not like risk.
• B)Hedgers seek to transfer risk.
• C)Speculators seek to transfer risk.
• D)Speculators are hedgers, there isn't any difference.

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Definitions:

Depreciation Rates

The percentage at which an asset's value is reduced to account for wear and tear over its useful life.

Units-of-activity Method

A depreciation method that allocates the cost of an asset over its useful life based on units of production or use, rather than passage of time.

Straight-line Method

A method of calculating depreciation by evenly allocating the cost of an asset over its estimated useful life.

Salvage Value

The expected residual valuation of an asset at the conclusion of its operational life, commonly included in the calculations for depreciation.