Investors interested in hedging may buy a futures contract in order to lock in a price on a specific asset at a future date.

Question

Quizplus · Accepted Answer

Futures contracts are financial derivatives that obligate the buyer to purchase, and the seller to sell, a specific asset at a predetermined future date and price. Investors use futures contracts to hedge against price movements in the underlying asset, effectively locking in a price to manage risk.

Investors Interested in Hedging May Buy a Futures Contract in Order