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:

Fact-Finding Question

A question asked with the intent of gathering factual information or specifics about a topic, often used in research or investigative contexts.

Inductive Reasoning

A method of reasoning in which specific observations or experiences are used to make broad generalizations.

Unwarranted Assumption

A belief taken for granted without sufficient evidence or basis, leading to potential misunderstandings or erroneous conclusions.

Deductive Reasoning

A logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true.