Question

Assume that speculators purchased a futures contract at the beginning of the year. If the price of a security represented by the futures contract ____ over the year, then these speculators would likely have purchased the futures contract for ____ than they can sell it for.

Answer 1

Answer:

If the price of a security represented by the futures contract INCREASED over the year, then these speculators would likely have purchased the futures contract for LESS than they can sell it for.

Explanation:

The whole idea behind securities trading is to buy cheap and sell at a higher price. The term speculator usually refers to an investor that only trades with securities to be able to make short term gains, they do not invest money as long term investments. There is nothing wrong with them, it a risky job that yields high gains or extreme losses.