The Basic Difference Between Speculators and Hedgers in Futures Contracts

question 14

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) do not have an offsetting position in the underlying commodity.
• 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:

GDP

Gross Domestic Product, which measures the total economic output of a country, accounting for all goods and services produced within a given period.

Real GDP

An inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.

Nominal GDP

The gross domestic product measured at current market prices, without adjustment for inflation.

GDP Deflator

An index that measures the change in prices of all new, domestically produced, final goods and services in an economy over a period of time.