Login / Register   My Cart (0)

Here are all the actual test exam dumps for IT exams. Most people prepare for the actual exams with our test dumps to pass their exams. So it's critical to choose and actual test pdf to succeed.

All Products Contact now

Exam 2016-FRR Topic 1 Question 221 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 221
Topic #: 1
Using a forward transaction, Omega Bank buys 100 metric tones of aluminum for delivery in six-months' time. However, after two months, the bank becomes concerned with the potential fluctuations in aluminum prices and wants to hedge its potential exposure against a possible decline in aluminum prices. Which one of the following four strategies could the bank use to offset the risk from its current exposure to aluminum as it sets the price for selling the commodity in four-months' time?

Suggested Answer: A Vote an answer

To hedge against potential declines in aluminum prices, Omega Bank should take a position that benefits from a price drop. Here are the steps and strategies:
* Current Position:
* Omega Bank has bought 100 metric tons of aluminum for delivery in six months.
* Hedging Strategy:
* To protect against a decline in aluminum prices, the bank should take a short position in the aluminum futures market. This involves selling aluminum futures contracts.
* Execution:
* By selling an aluminum futures contract, Omega Bank locks in a price for selling aluminum in the future, thus offsetting the risk of price declines.
The correct strategy is to sell an aluminum futures contract, which effectively hedges the bank's exposure to a potential drop in aluminum prices.
References
Source: How Finance Works

by Alger at Nov 07, 2025, 03:20 AM

Limited Time Offer

15%

Off

Get Premium 2016-FRR Questions as Interactive Self Test Engine or PDF

Comments

Chosen Answer:
This is a voting comment (?) , you can switch to a simple comment.
Switch to a voting comment New
Nick name: Submit Cancel
A voting comment increases the vote count for the chosen answer by one.

Upvoting a comment with a selected answer will also increase the vote count towards that answer by one. So if you see a comment that you already agree with, you can upvote it instead of posting a new comment.

Here are all the actual test exam dumps for IT exams. Most people prepare for the actual exams with our test dumps to pass their exams. So it's critical to choose and actual test pdf to succeed.

RECENT DISCUSSIONS

Useful Links

Contact Us

Our Working Time: ( GMT 0:00-15:00 )
From Monday to Saturday

Support: Contact now 

If you have any question please leave me your email address, we will reply and send email to you in 12 hours.

Copyright © 2026 Actual4test NETWORK CO.,LIMITED. All Rights Reserved. All trademarks used are properties of their respective owners. Privacy Policy

Disclaimer:
Actual4test doesn't offer Real SANS and GIAC Exam Questions.
Oracle and Java are registered trademarks of Oracle and/or its affiliates
Actual4test material do not contain actual actual Oracle Exam Questions or material.
Actual4test doesn't offer Real Microsoft Exam Questions.
Microsoft®, Azure®, Windows®, Windows Vista®, and the Windows logo are registered trademarks of Microsoft Corporation
Actual4test Materials do not contain actual questions and answers from Cisco's Certification Exams. The brand Cisco is a registered trademark of CISCO, Inc
CFA Institute does not endorse, promote or warrant the accuracy or quality of these questions. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Actual4test does not offer exam dumps or questions from actual exams. We offer learning material and practice tests created by subject matter experts to assist and help learners prepare for those exams. All certification brands used on the website are owned by the respective brand owners. Actual4test does not own or claim any ownership on any of the brands.