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  • 4.10.4-COTTON TRADING-THE DISADVANTAGES OF THE GUARANTEED MINIMUM PRICE CONTRACT

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  • The disadvantages of the guaranteed minimum price contract

    Chapter 4 - Cotton trading - Guaranteed minimum price contracts

     
     
    • Like any form of insurance, there is a cost involved.
    • Obviously, like car insurance, if there is no accident, there will be a cost but no return. If the market does not rise, or if the market falls, then there will be no change in the sale price of the contract.