A speculator who sells a futures contract is betting that prices will _____ by the expiration of the contract.
A) decrease
B) increase
C) remain constant
D) Be unusually volatile

Question

Quizplus · Accepted Answer

When a speculator sells a futures contract, they are essentially agreeing to sell the underlying asset at a specific price on a future date. If they believe that prices will decrease by the expiration of the contract, they can sell now at a higher price and buy later at a lower price, realizing a profit. Therefore, they are betting on prices decreasing.

A Speculator Who Sells a Futures Contract Is Betting That