Question

A corn processor in Nebraska has decided to purchase a futures contract for corn. The contract will increase in value if the price of corn rises, thereby offsetting the processors’ increased costs/decreased net income. In this example, the corn processor is:

Answer 1

Answer:

hedging

Explanation:

According to my research on different business strategies, I can say that based on the information provided within the question in this example, the corn processor is hedging. This term refers to an investment position whose main focus is to offset potential losses or gains that may be incurred by a certain investment.

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