A hedger can be described as someone who enters into a futures contract:
A)with the purpose of making a profit.
B)with the purpose of minimising risk.
C)as a seller with the purpose of minimising risk.
D)with the purpose of buying or selling a commodity defined in the futures contract.

Question

Quizplus · Accepted Answer

A hedger enters into a futures contract to protect themselves from the risk of price volatility in the underlying asset. By doing so, they are not trying to make a profit directly from the futures contract, but rather to minimize the risk associated with their business operations. This is achieved by securing a price for the asset in the future, typically at a price that is more favorable than the market price at that time, thereby reducing the possibility of loss due to price fluctuations.

A Hedger Can Be Described as Someone Who Enters into a Futures