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    Question

    Consider the following statements about the participants

    in the derivatives market: 1. Hedgers use derivatives to manage or mitigate risk by taking positions opposite to their current holdings. 2. Speculators use derivatives to bet on future price movements, aiming to profit from market fluctuations. 3. Arbitrageurs exploit price differences in different markets to earn risk-free profits. 4. Brokers act as intermediaries, facilitating the trade of derivatives between buyers and sellers.
    A 1 and 2 only Correct Answer Incorrect Answer
    B 1, 2, and 3 only Correct Answer Incorrect Answer
    C 2 and 4 only Correct Answer Incorrect Answer
    D 3 and 4 only Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    Each participant has a unique role in the derivatives market, contributing to its overall functionality and liquidity.

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