What investment would be a hedge for a corn farmer

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Reference no: EM131552317

1. The seller of a forward contract agrees to:

A. Deliver a product at a later date for a price set today.

B. Receive a product at a later date at the price on that later date. C. Receive a product at a later date for a price set today.

D. Deliver a product at a later date for a price set on that later date. E. None of the above answers.

2. The price for immediate delivery of a commodity is called the:

A. Forward price.

B. Exercise price.

C. Spot price.

D. Impact price.

E. English price.

3. Hedging contracts on a futures exchange eliminates:

A. Market risk.

B. Counterparty risk.

C. Default risk.

D. Currency risk.

E. None of the above answers.

4. Four investors enter into long oil contracts. Three are speculators and one is hedging. Which of the following is hedging?

A. Farmer

B. Cereal company

C. Mutual fund

D. Airline company

E. None of these answers

5. What investment would be a hedge for a corn farmer?

A. Long corn put option.

B. Long corn call option.

C. Short corn call option.

D. Long corn futures.

E. None of these answers

Reference no: EM131552317

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