Question 303 pts

Starbucks buys coffee futures to try to hedge some of its exposure to changing coffee bean prices. However, the beans Starbucks buys for its coffee are from Africa and not deliverable into the contract. Unfortunately unexpected over-supply from South America causes prices on coffee futures to fall while the Starbuck's coffee bean costs from Africa remain largely unchanged. This is an example of ...

Group of answer choices

Contango

Backwardation

Normal Contango

Basis Risk.

2

The most common users of derivatives are...

Group of answer choices

hedgers.

arbitragers.

speculators.