Why would a manufacturer elect to use a long call strategy instead of a forward contract to hedge the risk associated with variable costs?
What will be an ideal response?
Answer:
The long call strategy allows the manufacturer to benefit from price declines, while still maintaining a hedge against price increases.
Business
You might also like to view...
The eurobond market owes its existence to all of the following reasons unique factors EXCEPT:
A) free bond ratings B) the absence of regulatory interference C) less stringent disclosure practices D) favorable tax treatment
Business
Which of the following steps in the configuration process of a SqlDataSource server control
represents the main difference between connecting to an Oracle vs. an SQL Server data source? A) Connecting to a database B) Saving the connection to a file C) Configuring the select statement D) Choosing the data provider
Business