________ is method of hedging because a firm can lock in the cost of a commodity at today's prices plus any carrying costs.

Question

Quizplus · Accepted Answer

Storage is a method of hedging because it allows a firm to purchase and store a commodity at today's prices, locking in the cost and avoiding the risk of price fluctuations in the future. The firm can then sell the stored commodity at a later date, either at a profit or to meet its own production needs. The cost of storage (carrying costs) can also be factored in to determine the overall cost of the hedging strategy. Vertical integration, merger, rationalization, and internalization are not directly related to hedging with commodities.

________ Is Method of Hedging Because a Firm Can Lock