The basic difference between speculators and hedgers in futures contracts is that speculators:
A)will profit regardless of the direction of price change.
B)are not protecting their commodity holdings through an offsetting transaction.
C)are concerned only with long-term price movements.
D)take a position in more than one commodity at a time.

Question

Quizplus · Accepted Answer

Hedgers use futures contracts to protect against price movements in the commodities they hold by taking an offsetting position, while speculators aim to profit from price movements without seeking to hedge or protect an underlying commodity holding.

The Basic Difference Between Speculators and Hedgers in Futures Contracts