______________ of futures markets.
A) Hedging is a use
B) Hedging and speculation are both uses
C) Speculation is a use
D) Margin buying of futures contracts is a use

Question

Quizplus · Accepted Answer

Hedging and speculation are both common uses of futures markets. Hedging involves using futures contracts to protect against potential losses in another market, while speculation involves buying and selling futures contracts to profit from anticipated price movements. Margin buying of futures contracts is a method of trading rather than a use, so option D is incorrect. Option A is incorrect because it only identifies one use, while in reality futures markets serve multiple purposes. Option C is incorrect because speculation is also a legitimate use of futures markets.

______________ of Futures Markets