_________ Take Positions in Financial Futures to Reduce Their Exposure

question 42

Multiple Choice

  _________ take positions in financial futures to reduce their exposure to future movements in interest rates or stock prices; ________ commonly take the opposite position and thus serve as counterparties on many transactions.

• A)Speculators; hedgers
• B)Hedgers; speculators
• C)Arbitrageurs; speculators
• D)Hedgers; arbitrageurs

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Definitions:

Insurance Company

A business entity that provides financial coverage to individuals and entities against potential losses or damages in exchange for premium payments.

Insurable Interest

A stake in the value of an entity or thing that provides a legal right or requirement to insure it.

Insurance Contract

A legally binding agreement between an insurance company and the policyholder, specifying the terms for the payment of insurance benefits.

Insuring Property

The act of purchasing insurance to protect against loss or damage to property due to hazards like fire, flood, or theft.