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How Can Selling a Futures Contract Mitigate Agricultural Risk for Farmers

Question 202

Multiple Choice

How can selling a futures contract mitigate agricultural risk for farmers?


A) Farmers can grow crops that are not subject to weather inclemency.
B) Farmers can pin down a price for their produce even if there is volatility in market prices.
C) Futures contracts allow farmers to store their grains in silos until the market prices rise.
D) Futures contracts allow farmers to trade in crops whose prices will fall in the future.

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