A Purchaser of Commodities Who Is Completely Hedged with Forward

question 47

True/False

A purchaser of commodities who is completely hedged with forward contracts has eliminated the risk that prices will rise before the purchase is concluded.

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Definitions:

Situational Control

The extent to which conditions and variables can be manipulated or regulated in the context of an experiment or study setting.

Independent Variables

Variables that are manipulated or controlled in an experiment to test their effect on dependent variables.

Random Assignment

A method used in experiments to divide participants into groups in a way that each has an equal chance of being placed in any group, minimizing biases.

Generalizable

The extent to which findings from a study can be applied or extended to larger populations beyond the sample studied.