An individual who neither uses nor produces a commodity but sells 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) hedging trying to transfer risk.
D) using arbitrage to earn profits without taking a risk.
Correct Answer:
Verified
Q16: Speculators differ from hedgers in the sense
Q17: The purpose of derivatives is to:
A) increase
Q18: Derivatives are financial instruments that:
A) present high
Q19: A wheat farmer who must purchase his
Q20: In a derivative transaction:
A) the dollar amount
Q22: On the settlement date of a futures
Q23: Sue sells a futures contract for U.S.
Q24: The option writer is:
A) the seller of
Q25: Tom buys a futures contract for U.S.
Q26: An arbitrageur is someone who:
A) always takes
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