If the firm must buy silver in the future and thus pay for t

If the firm must buy silver in the future and thus pay for the metal in the future, management may reduce the risk of loss from an increase in the price of silver by

Select one:

a.

?refusing to accept delivery if the price rises

b.

?accepting delivery early

c.

?taking a short position and entering a contract to deliver silver

d.

?taking a long position and entering a contract to buy silver

Solution

?taking a long position and entering a contract to buy silver

this way he fixes the price he is doing to pay in the future