Rachel, an Adventurous Investor, Bought a Futures Contract for May

question 39

Multiple Choice

Rachel, an adventurous investor, bought a futures contract for May delivery of 40,000 lbs of lean pork. In late April, she is becoming uneasy about what to do with so much pork.

• A) She can choose settle her profit or loss in cash rather than pork.
• B) She can try to find someone willing to take delivery of the pork.
• C) She can sell the contract or cancel it by entering into the opposite contract (to sell rather than buy).
• D) She needs to buy a very large freezer.

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Definitions:

Finished Product

A finished product is a fully manufactured item ready for sale or use, having gone through all stages of production.

Quantity Produced

The total number of units of a product made by a business within a specific period.

Inputs

All the resources that go into a business.

Raw Materials

Basic substances in their natural, modified, or semi-processed state, used as inputs to a production process for manufacturing, finishing, or fabrication.