Suppose your audit client is a manufacturer of wheat crackers, and thereby relies heavily on wheat. However, the wheat prices have been fluctuating a lot recently, and that has exposed your client to purchase price risk (and thereby increased your assessment of inherent risk). Your client wants your help in devising a good hedging strategy. Which of the following can the client undertake to reduce their exposure to fluctuating wheat prices?

Question 8 options:

	Buy call options on wheat which will help them set a maximum price for their wheat purchase
	Buy put options on wheat which will help them set a minimum price for their wheat purchase
	You will suggest no hedging since fluctuating wheat prices are a regular operational risk
	You will suggest investing in a large climate-controlled warehouse and keep buying wheat whenever prices fall