A cereal company generally enters into a forward contract in wheat as a:
A) Hedger.
B) Speculator.
C) Spot trader.
D) Broker.
E) Spectator.

Question

Quizplus · Accepted Answer

A cereal company enters into a forward contract in wheat primarily as a hedger to lock in prices and protect against the risk of price fluctuations in the wheat market. This helps ensure stable costs for their production inputs.

A Cereal Company Generally Enters into a Forward Contract in Wheat