A Wheat Farmer Who Must Purchase His Inputs Now but Will

Multiple Choice

A wheat farmer who must purchase his inputs now but will sell his wheat at a market price at a future date:

A) Faces a market risk that cannot be offset.
B) Is a good example of what the chapter refers to as a speculator.
C) Would hedge by taking the short position in a wheat futures contract.
D) Would hedge by taking the long position in a wheat futures contract.