In hedging, the purchaser in the purchase commitment simultaneously enters into a contract in which it agrees to sell in the future:
A) the same quantity of the same goods at a fixed price.
B) a higher quantity of the same goods at a higher price.
C) a lower quantity of the same goods at a fixed price.
D) same quantity of different goods at a lower price.

Question

Quizplus · Accepted Answer

In hedging, the purchaser of a purchase commitment enters into a contract to sell the same quantity of the same goods at a fixed price in the future. This helps them to mitigate the risks associated with the price fluctuations of the underlying commodity. So, option A is the correct choice.

In Hedging, the Purchaser in the Purchase Commitment Simultaneously Enters