The price differences between futures and the underlying assets in the futures markets are reduced by the actions of arbitrageurs.

Here's a step-by-step explanation:

1. Arbitrageurs are individuals or institutions that take advantage of price differences in different markets for the same asset.

2. In the context of futures markets, if there is a price difference between the futures contract (which is a contract to buy or sell an asset at a future date at a predetermined price) and the underlying asset (the asset on which the futures contract is based), arbitrageurs can make a risk-free profit by simultaneously buying the cheaper one and selling the more expensive one.

3. This action of buying and selling reduces the price difference between the futures contract and the underlying asset, bringing them into alignment. This is because the increased demand for the cheaper asset raises its price, while the increased supply of the more expensive asset lowers its price.

4. Therefore, it's the arbitrageurs who reduce the price differences between the futures and the underlying assets in the futures markets.

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The price differences between futures and the underlying assets in the futures markets are reduced by the actions of arbitrageurs.

Here's a step-by-step explanation:

1. Arbitrageurs are individuals or institutions that take advantage of price differences in different markets for the same asset.

2. In the context of futures markets, if there is a price difference between the futures contract (which is a contract to buy or sell an asset at a future date at a predetermined price) and the underlying asset (the asset on which the futures contract is based), arbitrageurs can make a risk-free profit by simultaneously buying the cheaper one and selling the more expensive one.

3. This action of buying and selling reduces the price difference between the futures contract and the underlying asset, bringing them into alignment. This is because the increased demand for the cheaper asset raises its price, while the increased supply of the more expensive asset lowers its price.

4. Therefore, it's the arbitrageurs who reduce the price differences between the futures and the underlying assets in the futures markets.

Knowee AI · Accepted Answer

The price differences between futures and the underlying assets in the futures markets are reduced by the actions of arbitrageurs.

Here's a step-by-step explanation:

1. Arbitrageurs are individuals or institutions that take advantage of price differences in different markets for the same asset.

2. In the context of futures markets, if there is a price difference between the futures contract (which is a contract to buy or sell an asset at a future date at a predetermined price) and the underlying asset (the asset on which the futures contract is based), arbitrageurs can make a risk-free profit by simultaneously buying the cheaper one and selling the more expensive one.

3. This action of buying and selling reduces the price difference between the futures contract and the underlying asset, bringing them into alignment. This is because the increased demand for the cheaper asset raises its price, while the increased supply of the more expensive asset lowers its price.

4. Therefore, it's the arbitrageurs who reduce the price differences between the futures and the underlying assets in the futures markets.

In the futures markets, price differences between the futures and the underlying assets are reduced by the actions of:Group of answer choicesarbitrageurshedgersspeculatorstraders

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