You are a buyer for a manufacturer of chocolates and candies and have been told...
50.1K
Verified Solution
Link Copied!
Question
Basic Math
You are a buyer for a manufacturer of chocolates and candies and have been told to hedge the cocoa and sugar needed for production of your upcoming orders.What is true below AND suggests you might prefer to hedge your needs using ONLY FUTURES contracts (i.e. exchange-traded, standardized) rather than using FORWARD contracts (i.e. directly with known suppliers)?FUTURES contracts may be customized to the buyer's and seller's specific termsFORWARD contracts can be easily offset if you don't want to take delivery at the time of expirationFUTURES contracts expose you to higher contra-party (counterparty) riskFUTURES contracts are less liquid and have a limited resale marketFUTURES contracts have margin requirements and are marked to market daily to ensure parties perform financially
You are a buyer for a manufacturer of chocolates and candies and have been told to hedge the cocoa and sugar needed for production of your upcoming orders.What is true below AND suggests you might prefer to hedge your needs using ONLY FUTURES contracts (i.e. exchange-traded, standardized) rather than using FORWARD contracts (i.e. directly with known suppliers)?FUTURES contracts may be customized to the buyer's and seller's specific termsFORWARD contracts can be easily offset if you don't want to take delivery at the time of expirationFUTURES contracts expose you to higher contra-party (counterparty) riskFUTURES contracts are less liquid and have a limited resale marketFUTURES contracts have margin requirements and are marked to market daily to ensure parties perform financially
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.