One of Wabash’s oldest clients, Fond du Lac, has been in business for more than 100 years and has developed sophisticated pricing models. Currently, their models predict that the price of corn is poised to more than double in the next six months. Fond du Lac has purchased a large amount of corn in the spot market and has taken delivery at its storage facilities. When the price increase occurs, they intend to sell the corn in the spot market.
Fond du Lac would most likely be acting as a(n):
- speculator.
- arbitrageur.
- informed investor.
This question is from CFA Institute Mock tests, where they have given answer as B. But I think answer should be A. Can anyone elaborate.
Me too think it should be A. the reason for the same being the model is not kind of universal model its their algorithm so it will be made based on personal beliefs and hence whatever the model suggests is kind of individual to them although different factors have also been incorporated but the model works for them. So i believe arbitrageur is different.
Arbitrage bcz only arbitrager takes delivery others only trade in market