Although U.S.Steel is integrated into iron ore mining, it currently does not own any of the mines that supply its coking coal because:
A)the company has a high requirement of coking coal which cannot be supplied by a single mine.
B)the coal prices are highly unpredictable and volatile.
C)there are a limited number of coal suppliers.
D)futures and options markets are available for coal.

Question

Quizplus · Accepted Answer

U.S. Steel does not own coking coal mines because futures and options markets allow them to hedge against price volatility, making it unnecessary to own the mines directly.