Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) Firms generally do not possess better information than outside investors regarding the risk of future commodity price changes, nor can they influence that risk through their actions.
• B) Cash flows in a futures contract are exchanged on a monthly basis, rather than waiting until the end of the contract, through a procedure called marking to market.
• C) The firm may speculate by entering into contracts that do not offset its actual risks.
• D) When a firm authorizes managers to trade contracts to hedge, it opens the door to the possibility of speculation.

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Definitions:

Increase Or Decrease

Terms used to describe a change in value or quantity, either going up (increase) or going down (decrease).

Net Income

The profit of a company after all expenses and taxes have been deducted from total revenue, indicating the company's financial performance over a period.

Net Cash Flow

The difference between a company's cash inflows and outflows within a given period, indicating the company's cash liquidity.

Accounts Receivable

Payables to a company from clients for the use or delivery of goods or services, not yet reimbursed.