Speculators in the futures markets
A)make the market more volatile.
B)contribute liquidity to the market.
C)engage mainly in short sales.
D)serve no real economic function.

Question

Quizplus · Accepted Answer

Speculators in the futures market contribute liquidity to the market, as they are willing to buy and sell contracts without the intention of actually taking delivery of the underlying asset. Their presence can help improve market efficiency by facilitating price discovery and increasing trading activity. While speculators can contribute to market volatility, they also help provide opportunities for hedgers to mitigate risk. Therefore, choice B is the correct answer.

Speculators in the Futures Markets