Which of the following statements is true?
A)Financial futures have been around as long as agriculture and other commodity futures.
B)Futures and options are always used to hedge or reduce risk.
C)Both parties to a futures agreement may be hedgers.
D)Options are cheaper than futures.

Question

Quizplus · Accepted Answer

Both parties to a futures agreement may be hedgers, speculators, or a combination of both. A hedger is someone who uses futures or other derivatives to manage price risk. A speculator, on the other hand, is someone who takes on price risk in order to profit from price movements. Therefore, option D is incorrect as options can be more expensive than futures depending on the specific contract and market conditions. Option A is also incorrect as financial futures, such as interest rate or currency futures, are relatively new compared to agricultural and other commodity futures. Finally, option B is incorrect as futures and options can also be used for speculative purposes.

Which of the Following Statements Is True