Suppose You Are a Manager for a Company That Produces

question 117

Multiple Choice

Suppose you are a manager for a company that produces grape jelly.Which of the following is the best way for you to reduce your risk?

• A) acquire a derivative that increases in value if grape prices increase
• B) acquire a derivative that increases in value if grape jelly prices increase
• C) sell a derivative that increases in value if grape prices increase
• D) sell a derivative that increases in value if grape jelly prices increase

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Definitions:

Attract Customers

Strategies or practices aimed at drawing in potential clients or customers to a business or product.

Lowest Price

The smallest amount of money that can be paid for a product or service in the market.

Market Capitalization

The total value of a company's outstanding shares of stock, calculated by multiplying the current stock price by the total number of shares.

Outstanding

Exceptionally good or conspicuously notable above others.