One of the Drawbacks of Using Futures Contracts to Hedge

question 25

Multiple Choice

One of the drawbacks of using futures contracts to hedge is that managers in a firm may use the futures contracts to ________ and consequently increase the firm's risk rather than reducing it.

• A)hedge
• B)produce
• C)speculate
• D)increase managerial compensation
• E)expand

---

Definitions:

Rational-emotive Therapy

A form of psychotherapy that identifies irrational beliefs, challenges these beliefs, and encourages the adoption of healthier, rational alternatives.

Therapeutic Obstacles

Challenges or barriers that interfere with the effectiveness of therapeutic interventions and patient progress.

Maladaptive Behaviours

Actions or tendencies that are counterproductive to an individual's well-being or adjustment to their environment, often hindering functioning and success.

Defensive Manoeuvres

Strategies employed, often unconsciously, to protect the ego from anxiety and to maintain self-esteem.