The major function of futures markets is to transfer price risk from ________.

Question

Quizplus · Accepted Answer

The major function of futures markets is to transfer price risk from hedgers to speculators. Hedgers use futures contracts to protect themselves from potential price fluctuations in the underlying asset. Speculators, on the other hand, take on risk in the hopes of making a profit by correctly predicting the direction of price movements. Thus, futures markets allow hedgers to transfer their price risk to speculators who are willing to take it on in exchange for the potential for profit.

The Major Function of Futures Markets Is to Transfer Price