The primary purpose of financial futures is to:
A)Benefit from increases in interest rates
B)Protect against swings in interest rates or prices of financial assets
C)Translate one currency into another
D)Guarantee the repayment of loan principal

Question

Quizplus · Accepted Answer

The primary purpose of financial futures is to protect against swings in interest rates or prices of financial assets. By buying or selling futures contracts, investors can lock in a price for a financial asset or interest rate, thus protecting themselves from potential losses due to market fluctuations. While financial futures may benefit from changes in interest rates, this is not their primary purpose. They are also not used to translate currencies or guarantee loan repayment.

The Primary Purpose of Financial Futures Is To