A speculator will often prefer to buy a futures contract rather than the underlying asset because ____________.
I.gains in futures contracts can be larger due to leverage
II.transaction costs in futures are typically lower than in spot markets
III.futures markets are often more liquid than the markets of the underlying commodities
A) I and II only
B) II and III only
C) I and III only
D) I, II and III

Question

Quizplus · Accepted Answer

Speculators prefer futures contracts because they offer leverage, lower transaction costs, and higher liquidity compared to the underlying asset markets.

A Speculator Will Often Prefer to Buy a Futures Contract