The motivation of hedgers in the futures market is to:
A) Seek trading profits
B) Speculate on changes in basis
C) Eliminate price risk
D) Secure the supply source
E) All of the above

Question

Quizplus · Accepted Answer

Hedgers use futures contracts to eliminate price risk by locking in a price for a commodity or financial asset they plan to buy or sell in the future. Their goal is not to seek trading profits or speculate on changes in basis, but rather to protect themselves from potential price fluctuations. Hedgers may also use futures contracts to secure a supply source, but this is secondary to their primary goal of risk management.

The Motivation of Hedgers in the Futures Market Is To