An individual who neither uses nor produces a commodity but buys a futures contract for the asset is:
A)Speculating that the price of the commodity is going to fall.
B)Speculating that the price of the commodity is going to increase.
C)Is using arbitrage to earn profits without taking a risk.
D)Is hedging and transferring risk.

Question

Quizplus · Accepted Answer

An individual who buys a futures contract without using or producing the commodity is speculating that the price of the commodity will increase, allowing them to sell the contract at a higher price later.

An Individual Who Neither Uses nor Produces a Commodity but Buys