The basic reason why investors use spreading strategies when speculating in commodities is to
A) increase leverage.
B) increase profits.
C) reduce risk.
D) decrease transaction costs.

Question

Quizplus · Accepted Answer

Spreading strategies in commodities trading involve taking multiple positions that are expected to offset each other to some extent. This approach is primarily used to reduce risk by hedging against price movements in the market, rather than to increase leverage, profits, or decrease transaction costs directly.

The Basic Reason Why Investors Use Spreading Strategies When Speculating