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:

Sales Data

Quantitative information regarding the number of products or services sold within a specific time period, often used for analysis and forecasting.

Excel Scenario Manager

A tool within Microsoft Excel that allows users to create and analyze multiple scenarios based on varying sets of assumptions to forecast different outcomes.

Variables

Elements, characteristics, or conditions that are subject to change or vary among individuals within a study or experiment.

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Mathematical problems concerned with finding the best solution from a set of feasible solutions, given some constraints.