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118
Which of the following is true?
A.Gold producers should always hedge the price they will receive for their production of gold over the next three years
B.Gold producers should always hedge the price they will receive for their production of gold over the next one year
C.The hedging strategies of a gold producer should depend on whether it shareholders want exposure to the price of gold
D.Gold producers can hedge by buying gold in the forward market
A.Gold producers should always hedge the price they will receive for their production of gold over the next three years
B.Gold producers should always hedge the price they will receive for their production of gold over the next one year
C.The hedging strategies of a gold producer should depend on whether it shareholders want exposure to the price of gold
D.Gold producers can hedge by buying gold in the forward market
Answer: C
Some shareholders buy gold stocks to gain exposure to the price of gold. They do not want the company they invest in to hedge. In practice gold mining companies make their hedging strategies clear to shareholders.
Some shareholders buy gold stocks to gain exposure to the price of gold. They do not want the company they invest in to hedge. In practice gold mining companies make their hedging strategies clear to shareholders.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015