__________ buy or sell futures contracts to reduce their exposure to the risk of future price movements in the underlying asset.
A) Hedgers
B) Speculators
C) Arbitrageurs
D) None of the above.

Question

Quizplus · Accepted Answer

Hedgers use futures contracts to manage their risk exposure to price fluctuations in the underlying asset. They do not seek to profit from price movements, but rather to protect themselves against potential losses. Speculators, on the other hand, trade futures contracts to profit from price movements and bear the risk of those movements. Arbitrageurs seek to profit from price discrepancies between different markets or securities and do not necessarily use futures contracts for this purpose.

__________ Buy or Sell Futures Contracts to Reduce Their Exposure