________ is method of hedging because a firm can lock in the cost of a commodity at today's prices plus any carrying costs.

A) Vertical integration
B)Storage
C)Merger
D)Rationalization
E)Internalization

Question

________ is method of hedging because a firm can lock in the cost of a commodity at today's prices plus any carrying costs.

A) Vertical integration
B)Storage
C)Merger
D)Rationalization
E)Internalization

Quizplus · Accepted Answer

Storage is a method of hedging because a firm can purchase and store a commodity at today's prices, thus locking in the cost of the commodity and any carrying costs associated with maintaining and storing the product. This can protect the firm from price movements in the future that may increase the cost of the commodity. Vertical integration, merger, rationalization, and internalization are not methods of hedging.

________ Is Method of Hedging Because a Firm Can Lock