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Your company buys wheat to make bread. How can you hedge your exposure to the price...

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Finance

Your company buys wheat to make bread. How can you hedge yourexposure to the price of wheat? Check all that apply: Buy calloptions on wheat

1.Buy wheat futures

2.Buy put options on wheat

3.Sell call options on wheat

4.Sell wheat futures

Answer & Explanation Solved by verified expert
4.4 Ratings (775 Votes)
Only one of the 5 options given in question can be used for hedging your exposure to the price of the raw material of bread ie is wheat You can Buy wheat futures As your company makes bread so the requirement of wheat will always will be there so    See Answer
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Transcribed Image Text

Your company buys wheat to make bread. How can you hedge yourexposure to the price of wheat? Check all that apply: Buy calloptions on wheat1.Buy wheat futures2.Buy put options on wheat3.Sell call options on wheat4.Sell wheat futures

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