The Purpose of a Hedging Strategy Is to

question 106

Multiple Choice

The purpose of a hedging strategy is to

• A) avoid speculation on future prices.
• B) speculate that future prices will be lower than the spot price.
• C) speculate that future prices will be higher than the spot price.
• D) avoid exposure to commodity rate risk.

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Definitions:

Average

A numerical value expressing the central or typical value in a set of data, calculated as the sum of the values divided by the number of values.

Very Low Values

Refers to measurements or figures that are significantly below an established average or expected baseline.

Median

A statistical measure representing the middle value in a data set, where half the numbers are above it and half are below.

Atomic Number

The number of protons found in the nucleus of an atom, which determines the chemical properties of an element and its place in the periodic table.