Futures market transactions are used to reduce risk. Risk may not be totally offset if:
A) the two instruments have different maturities.
B) payoff schedules of the two instruments are different.
C) the volatility of the two instruments are different.
D) the price movements are not perfectly correlated.
E) All of

Question

Quizplus · Accepted Answer

All of the given options can lead to imperfect risk offsetting in futures market transactions.

Futures Market Transactions Are Used to Reduce Risk