Which One of the Following Statements About Speculators in Futures

question 27

Multiple Choice

Which one of the following statements about speculators in futures markets is correct?

• A) Their main aim is to reduce their exposure to risk.
• B) They make it difficult for hedgers to find someone to take the opposite position.
• C) They aid hedgers by adding to the liquidity in the markets.
• D) Once a trader is known as a speculator they are no longer allowed to participate in the markets.

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Definitions:

Intermediary

Entities or individuals that act as a mediator or a link between two parties, typically in a transaction or communication process.

Legal Authority

The officially sanctioned power to make decisions, to direct others, or to enact laws or directives.

Manufacturer

An entity or business that produces goods on a large scale using raw materials and various processes, typically involving machinery and labor.

Marketing Channel

Pathways that products and services follow from producers to consumers, including intermediaries like wholesalers and retailers.