The futures hedge
A)eliminates all risk from price movements.
B)is most valuable for protecting against anticipated price changes.
C)is most valuable for protecting against unanticipated price changes.
D)is most valuable for protecting against price increases.

Question

Quizplus · Accepted Answer

The futures hedge is most valuable for protecting against unanticipated price changes, as it allows the buyer to lock in a price for a specific commodity or financial instrument, protecting them from any unexpected price changes in the future. It does not eliminate all risk, as market conditions can still affect prices. It is also not limited to protecting against price increases, as it can be used to protect against both increases and decreases in price.

The Futures Hedge