The primary purpose of financial futures is to:
A) benefit from increases in interest rates.
B) protect against swings in interest rates or prices of financial assets.
C) translate one currency into another.
D) guarantee the repayment of loan principal.

Question

Quizplus · Accepted Answer

The primary purpose of financial futures is to protect against swings in interest rates or prices of financial assets. Futures contracts allow investors to lock in a price or interest rate for a future date, providing protection against market fluctuations. While futures contracts can also be used to benefit from increases in interest rates or to translate currencies, these are not their primary purpose. Guaranteeing the repayment of loan principal is not a function of financial futures.

The Primary Purpose of Financial Futures Is To