Exam 26: Risk Management

A cotton producer has purchased cotton futures that involve 50,000 pounds of cotton at a price of $0.60 per pound.By contract expiration the producer finds that cotton prices have declined by $0.07 per pound.As a result of the futures contracts, the producer will:

A survey of the world's 500 largest companies found that almost all the companies use derivatives in some way to manage their risk.What is the most common risk category that derivatives are used for managing risk?