In the futures markets, speculators take on extra risk in futures markets as a result of the actions of:Question 7Select one:a.tradersb.brokersc.day tradersd.hedgers
Question
In the futures markets, speculators take on extra risk in futures markets as a result of the actions of:Question 7Select one:a.tradersb.brokersc.day tradersd.hedgers
Solution
In futures markets, speculators take on extra risk as a result of the actions of hedgers. So, the answer is d. hedgers.
Here's why:
Hedgers are those who enter into futures contracts to reduce or eliminate the risk associated with the price of an underlying asset. They already own the asset or will need to own it in the future. Their goal is to protect themselves against potential price changes.
On the other hand, speculators are individuals or institutions that seek to profit from anticipated increases or decreases in futures prices. They have no interest in owning the underlying asset. They assume the price risk that hedgers seek to avoid. This extra risk can lead to substantial profit if the price change is in their favor, but it can also lead to significant loss if the price change is against them.
So, speculators take on extra risk in futures markets as a result of the actions of hedgers.
Similar Questions
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