The Basic Difference Between Speculators and Hedgers in Futures Contracts

question 22

Multiple Choice

The basic difference between speculators and hedgers in futures contracts is that speculators:

• A)Will profit regardless of the direction of price change
• B)Are not protecting their commodity holdings through an offsetting transaction
• C)Are concerned only with long-term price movements
• D)Take a position in more than one commodity at a time

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Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and profits or losses over a specific period, providing insights into its operational efficiency.

Retail Business

A business type that sells goods or services directly to end consumers.

Gross Profit

The difference between sales revenue and the cost of goods sold, representing the core profitability of a company's products or services before deducting operating expenses.

Inventory Included

This refers to all items of merchandise, raw materials, work-in-progress, and finished goods that a company holds for the purpose of sale or production.