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 $3.30 per bushel.At expiration the spot price of wheat is $2.80 per bushel.The hedger has:
A) saved 50' per bushel through hedging.
B) gained peace of mind at a price of 50' per bushel.
C) the opportunity to avoid taking delivery, since price declined.
D) locked in an effective price of $3.05 per bushel.
Correct Answer:
Verified
Correct Answer:
Verified
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