An Individual Who Neither Uses nor Produces a Commodity but Sells

question 43

Multiple Choice

An individual who neither uses nor produces a commodity but sells a futures contract for the asset is:

• A)Speculating that the price of the commodity is going to fall.
• B)Speculating that the price of the commodity is going to increase.
• C)Hedging trying to transfer risk.
• D)Using arbitrage to earn profits without taking a risk.

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Definitions:

Disease

A disorder of structure or function in a living organism that typically leads to signs or symptoms and is not a direct result of physical injury.

Groundwater Supplies

Underground sources of fresh water stored in aquifers, crucial for drinking water, irrigation, and industrial uses.

Sulphur Content

The quantity of sulfur present in a material, which is significant in assessing air pollution potential, especially in fuels.

Crude Oil Reserves

Quantities of crude oil that are identified and accessible for extraction with current technology.