The value of a futures contract entered into to hedge inventory being held for sale increases as the selling price of the inventory increases.

Name: The value of a futures contract entered into to hedge inventory being held for sale increases as the selling price of the inventory increases.
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Question

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The value of a futures contract is primarily determined by the difference between the contract price and the market price of the underlying asset, not directly by the selling price of inventory being hedged.

The Value of a Futures Contract Entered into to Hedge