A Seller of Commodities Who Has Entered into Forward Contracts

question 123

True/False

A seller of commodities who has entered into forward contracts with customers will profit if prices fall before the purchase is concluded.

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Definitions:

Net Income

The profit of a company after all expenses, taxes, and costs have been deducted from total revenue, reflecting the actual earnings.

Sales Increase

The rise in the quantity or revenue of products sold by a company over a specific period.

Margin of Safety

The difference between actual or expected sales and sales at the break-even point, indicating how much sales can fall before a business incurs a loss.

Break-even Point

The level of sales at which profit is zero.