Which One of the Following Statements Is Correct If a Speculator

question 55

Multiple Choice

Which one of the following statements is correct if a speculator short sells a commodity or financial futures contract?

• A) The speculator expects to profit from a decline in the price of the contract.
• B) The speculator stands to make an unlimited amount of profit since there is no limit to how high the price of the underlying commodity or financial instrument can rise.
• C) The speculator is hoping to gain some of the benefit derived from the volatile price while limiting his/her exposure to loss.
• D) The speculator may be hedging if the underlying commodity is not in the speculator's possession.

---

Definitions:

Resistance Points

The positions beyond which a negotiator is unwilling or unable to go in a negotiation; the limit of compromise.

Mediator

A neutral third party who assists in negotiating an agreement between disputing parties.

Biasing Effect

The influence of preconceived notions or preferences on the judgment or decision-making process.

Adversarial Intervention

The involvement of an external party in a conflict or negotiation with the intent to advocate for one side, potentially escalating the situation.