Question
Which of the following is a valuable option available to the holder of a consumption commodity that is not available to the holder of the
Which of the following is a valuable option available to the holder of a consumption commodity that is not available to the holder of the futures contract on that commodity?
More than one correct answer is possible. For full credit, if more than one answer is correct, you must select all of the correct answers and none of the incorrect answers.
Group of answer choices
1.) The holder of a consumption commodity can rely on its value always increasing, whereas the value of a futures contract fluctuates up and down.
2.) A consumption commodity in storage gives the company flexibility in its purchases of the asset, allowing it to buy the asset on price dips and smooth out purchase prices over time.
3.) A consumption commodity in storage gives the company flexibility in its production schedule that it would not have if it had no storage facilities for the commodity.
4.) The holder of a consumption commodity can sell the asset at any time, whereas the holder of the futures contract always must hold the contract for a specified period of time.
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