A farmer who sells a futures contract is betting that prices will _____ at the expiration of the contract.
A)Decrease
B)Increase
C)Remain constant
D)Guarantee high profits

Question

Quizplus · Accepted Answer

If a farmer sells a futures contract, it means they are agreeing to sell a certain amount of their product at a fixed price on a future date. They do this so that they can lock in a guaranteed price for their product, even if prices in the market decline in the future. Therefore, the farmer is betting that prices will decrease at the expiration of the contract, so they can sell their product at a higher price than the market rate.

A Farmer Who Sells a Futures Contract Is Betting That