Multiple Choice
A hedger buys a futures contract that obligates the owner to take delivery of 5,000 bushels of wheat at a price of $6.75 per bushel. At expiration the spot price of wheat is $6.80 per bushel. The hedger has:
A) saved $0.05 per bushel through hedging.
B) gained peace of mind at a price of $0.05 per bushel.
C) the opportunity to avoid taking delivery since the price increased.
D) locked in an effective price of $6.80 per bushel.
Correct Answer:
Verified
Correct Answer:
Verified
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