Question

What is the prime motive for futures contracts?

a.

Actual delivery of contracted assets

b.

Speculation and hedging

c.

Realizing the money difference through actual delivery

d.

Hedging and reducing speculation

Answer: (b).Speculation and hedging Explanation:The prime motive for futures is not actual delivery but hedging and speculation. They are mostly paper contracts entered into by the counterparties with an objective to realize the money difference.

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Q. What is the prime motive for futures contracts?

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