The Major Function of Futures Markets Is to Transfer Price

question 32

Multiple Choice

The major function of futures markets is to transfer price risk from ________.

• A) aggressive investors to speculators.
• B) hedgers to conservative investors.
• C) speculators to hedgers.
• D) hedgers to speculators.

---

Definitions:

Replenishment Cycle

The recurring process of restocking sold-out or used products in inventory to maintain a desired stock level.

ESC (Expected Shortage per Cycle)

A metric used in inventory management forecasting the expected stockout quantity for a given inventory cycle, aiding in optimization and planning.

Safety Inventories

Stock that is maintained to buffer against uncertainties in demand or supply, ensuring product availability.

Demand Uncertainty

The unpredictability related to the demand for products or services, often causing challenges in supply chain management.