What is a long futures hedge used for?

Hedging Strategies Quiz

Quiz
•
Social Studies
•
Professional Development
•
Hard
tasha razali
FREE Resource
26 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
To sell an asset in the future
To lock in a price for a future purchase
To minimize interest rate risks
To speculate on price increases
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is an argument against hedging?
It locks in prices for future transactions
Shareholders can make their own hedging decisions
It minimizes risks from market variables
It helps companies focus on their main business
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the spot price of crude oil on May 15 in the example?
$60 per barrel
$65 per barrel
$59 per barrel
$55 per barrel
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the effective price per barrel for the oil producer if the spot price is $55?
$65
$60
$59
$55
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the gain in futures if the price of oil on August 15 is $65?
$6 million
$10 million
$0
$4 million
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a long hedge appropriate for?
Selling an asset
Purchasing an asset in the future
Speculating on price drops
Minimizing interest rate risks
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How many futures contracts does the copper fabricator take for 100,000 pounds?
5 contracts
2 contracts
3 contracts
4 contracts
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