Are You a Hedging Pro?

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Questions and Answers

What causes price fluctuations?

  • Only market demand
  • Market demand, changes in supply, economic indicators, political instability, or natural disasters (correct)
  • Only changes in supply
  • None of the above

What is the principle of demand and supply?

  • A concept in physics
  • A foundational concept in economics (correct)
  • A principle of marketing
  • A principle of social psychology

What happens to prices when the demand for a product or service surpasses its supply?

  • Prices typically decrease
  • It depends on the product or service
  • Prices typically increase (correct)
  • Prices stay the same

What happens to prices in a competitive market?

<p>Prices tend to decrease (D)</p> Signup and view all the answers

What can cause a rise in prices for goods using a specific metal?

<p>A decrease in the availability of the metal due to a strike in a mining company (B)</p> Signup and view all the answers

What is forward buying?

<p>A strategy that involves buying goods or services in advance when prices are low (B)</p> Signup and view all the answers

How can having multiple suppliers help mitigate the risk of price volatility?

<p>By decreasing the risk of being tied to a single source (A)</p> Signup and view all the answers

What is the importance of collaboration in procurement during severe price fluctuations?

<p>To ensure the continuity of supply (D)</p> Signup and view all the answers

What is the purpose of negotiation in procurement during price fluctuations?

<p>To maintain favorable prices (C)</p> Signup and view all the answers

What is the role of procurement professionals during price fluctuations?

<p>To manage stakeholder relationships (C)</p> Signup and view all the answers

What is the benefit of identifying substitute materials during price fluctuations?

<p>To ensure the continuity of supply (B)</p> Signup and view all the answers

What is the potential impact of severe price fluctuations on organizations?

<p>Disruption in supply chain (D)</p> Signup and view all the answers

What is hedging in the context of procurement?

<p>Using financial instruments to protect against price swings (C)</p> Signup and view all the answers

What is the purpose of negotiating long-term contracts with suppliers?

<p>To protect against short-term market volatility (D)</p> Signup and view all the answers

Why is regular and transparent communication important in procurement?

<p>To maintain good relationships with stakeholders (D)</p> Signup and view all the answers

What is an example of sourcing necessary components from different suppliers?

<p>A manufacturer of electronic devices sourcing components from different suppliers across various geographical regions (D)</p> Signup and view all the answers

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