A futures contract to hedge possible future price changes of a forecasted sale of copper:
A)Represents a cash flow hedge.
B)Represents a fair value hedge.
C)Represents a foreign currency hedge.
D)Does not qualify as a hedge.

Question

Quizplus · Accepted Answer

A futures contract used to hedge the price changes of a forecasted sale of copper is considered a cash flow hedge because it is intended to manage the variability in cash flows associated with the forecasted transaction.

A Futures Contract to Hedge Possible Future Price Changes of a Forecasted