A bakery 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 bakery generally enters into a forward contract in wheat as a hedger to protect itself from the price risk associated with fluctuations in the price of wheat. Hedging is a common risk management strategy used by businesses that face uncertainty in the price of goods they need to purchase or sell.

A Bakery Generally Enters into a Forward Contract in Wheat