The User of a Commodity Who Is Trying to Insure

question 22

Multiple Choice

The user of a commodity who is trying to insure against the price of the commodity rising would:

• A)Take the short position in a futures contract.
• B)Take the long position in a futures contract.
• C)Be better off speculating on price movements and earning higher profits.
• D)Want to hedge by selling a futures contract.

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Definitions:

Conscientiousness

A personality trait characterized by diligence, carefulness, thoroughness, and organization.

Big Five Trait

A model that outlines five broad dimensions of human personality traits, including openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Volunteering

The act of offering services willingly without the expectation of payment.

Agreeableness

A personality trait characterized by warmth, friendliness, and a cooperative disposition.