The Basic Difference Between Speculators and Hedgers in Futures Contracts

question 8

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.
• C) are concerned only with long-term price movements.
• D)take a position in more than one commodity at a time.

---

Definitions:

Willingness-to-pay

The maximum amount an individual is ready to spend to procure a good or service, reflecting its perceived value.

Two-part Tariff

A pricing mechanism that consists of a fixed fee plus a variable charge for every unit of the good or service consumed.

Estate Planning Services

Professional services aimed at assisting individuals in managing the distribution of their assets and wealth after their death.

Two-part Tariff

A pricing strategy where the price of a product or service is composed of two parts: a fixed fee plus a variable charge based on usage or consumption.