Contracts can be used by both hedgers and speculators

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Reference no: EM131856907

Consider the following statement: “Futures and options contracts can be used by both hedgers and speculators.”

a) Distinguish between a hedger and a speculator.

b) CFL Ltd is a gold mining company that chooses to hedge only two-thirds of the risk it faces in the gold market. Does this mean that CFL Ltd is both a hedger and a speculator? Explain.

Reference no: EM131856907

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