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NEW QUESTION: 1
An automobile company that uses the futures market to set the price of steel to protect a profit against price increases is an example of:
A. A long hedge
B. Selling future.-is to protect against price declines.
C. Selling future.-is to protect the company from loss.
D. A short hedge
Answer: A
Explanation:
A change in prices can be minimized or avoided by hedging. Hedging is the process of using offsetting commitments to minimize or avoid the impact of adverse price movements. The automobile company desires to stabilize the price of steel so that its cost to the company will not rise and cut into profits. Accordingly, the automobile company uses the futures market to create a long hedge, which is a futures contract that is purchased to protect against price increases.

NEW QUESTION: 2
Which of the following are options when creating a Virtual Warehouse?
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