A purchaser of commodities who is completely hedged with forward contracts will profit if prices fall before the purchase is concluded.

Question

Quizplus · Accepted Answer

If a purchaser of commodities is completely hedged with forward contracts, they have locked in the price they will pay for the commodities at a future date. Therefore, they will not profit or lose if prices fall or rise before the purchase is concluded.

A Purchaser of Commodities Who Is Completely Hedged with Forward