Question
Boston Wire Corporation is a manufacturer of electrical wire. One of the main production inputs used by the firm to produce electrical wire is copper.
Boston Wire Corporation is a manufacturer of electrical wire. One of the main production inputs used by the firm to produce electrical wire is copper. The firm is concerned about price volatility in the copper market during the coming year. Which of the following is a valid strategy for hedging this exposure?
| a. | Buy (hold) put options on copper | |
| b. | Enter into a forward contract in which the firm agrees to sell copper at a fixed price in the future | |
| c. | Take a "seller's" position in a copper futures contract | |
| d. | None of the other answer choices are correct |
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
