What are the basic functions of financial futures and forward markets?
A)reduction of risk associated with price changes that occurred in the past
B)speculation in hopes of profiting from past price changes and mistakes that were made
C)elimination of future price changes
D)reduction of risk associated with future price changes and speculation in hopes of profiting from future price changes

Question

Quizplus · Accepted Answer

The basic functions of financial futures and forward markets are to reduce risk associated with future price changes and to allow speculation in hopes of profiting from future price changes. These markets provide a way for individuals and businesses to hedge against potential losses due to price fluctuations in various underlying assets such as commodities, currencies, and securities. They also provide an opportunity for investors to take advantage of anticipated price movements and potentially make a profit.

What Are the Basic Functions of Financial Futures and Forward