A Speculator Will Often Prefer to Buy a Futures Contract

question 6

Multiple Choice

A speculator will often prefer to buy a futures contract rather than the underlying asset because ____________.
I.gains in futures contracts can be larger due to leverage
II.transaction costs in futures are typically lower than in spot markets
III.futures markets are often more liquid than the markets of the underlying commodities

• A) I and II only
• B) II and III only
• C) I and III only
• D) I, II and III

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Definitions:

Institutional Justice

Institutional justice refers to the fairness and equality upheld within the structures and systems of institutions, including laws, policies, and their implementation.

Equality

The state of being equal, especially in status, rights, and opportunities.

Least Advantaged

Referring to individuals or groups that are most disadvantaged or lacking in resources, opportunities, and support in a society.

Parties

Social gatherings of invited guests, typically involving eating, drinking, and entertainment; can also refer to political groups organized to gain authority within a government.