In the futures markets,speculators take on extra risk in futures markets as a result of the actions of:
A) day traders.
B) hedgers.
C) brokers.
D) traders.

Question

Quizplus · Accepted Answer

Hedgers are market participants who use futures contracts to manage their price risk for an underlying asset, such as a commodity or financial instrument. In order to offset their risk, they must take an opposite position in the market, which creates an opportunity for speculators to take on extra risk by taking the other side of the trade. Day traders, brokers, and traders may also participate in futures markets, but they do not necessarily create additional risk for speculators.

In the Futures Markets,speculators Take on Extra Risk in Futures