How might a firm such as General Mills protect itself against fluctuations in raw material prices for breakfast cereals?
A) Buy commodity futures
B) Sell commodity futures
C) Buy put options on commodities
D) Sell put options on commodities

Question

Quizplus · Accepted Answer

By buying commodity futures, General Mills can lock in the price of raw materials at a future date, protecting itself against price increases.

How Might a Firm Such as General Mills Protect Itself