Speculators may use futures markets rather than spot markets because

Question

Quizplus · Accepted Answer

Speculators may prefer to use futures markets because transactions costs are lower and futures markets allow for leverage, which can increase potential gains (or losses). In contrast, spot markets may be less efficient or more risky for speculators. Therefore, choices A and B are both true and support the use of futures markets by speculators. Choices C and D are not necessarily true or relevant to the decision to use futures or spot markets.

Speculators May Use Futures Markets Rather Than Spot Markets Because