Which of the following best explains 'contract buying'?
A) Bought at last year's price.
B) Bought at possible future price.
C) Buying at current market prices.
D) Bought at previously agreed price.

Question

Which of the following best explains 'contract buying'? 
A) Bought at last year's price. 
B) Bought at possible future price. 
C) Buying at current market prices. 
D) Bought at previously agreed price.

Quizplus · Accepted Answer

Contract buying refers to buying goods or services at a previously agreed price. This type of buying is commonly used for commodities such as oil, gas or agricultural products, which have volatile prices. By entering into contracts, both the buyer and the seller can have greater certainty regarding their costs and revenues, respectively.

Which of the Following Best Explains 'Contract Buying