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:

Financial Performance

An assessment of how well a company can use assets from its primary mode of business and generate revenues.

ROE

Return on Equity; a financial ratio indicating the profitability of a company in relation to its equity capital.

EPS

Earnings Per Share; a metric that indicates the portion of a company's profit allocated to each outstanding share of common stock.

Financial Risk

The possibility of losing money on an investment or business venture, including the risk of losing some or all of the original investment.