Distinguish between hedgers and speculators.

Posted: January 10th, 2022

Distinguish between hedgers and speculators. Show how a hedger could use 90-day bankaccepted bill futures contracts to hedge interest rate uncertainty. Show how a speculator may use the same futures contracts in an attempt to make a profit. (LO 19.4)

‘In 2017, the average daily turnover in the Australian bond futures markets was 207000 contracts for the three-year and 162000 for the 10-year. This indicates an undesirably high level of speculation in the bond futures markets in Australia.’ Discuss the validity of this statement. (LO 19.2)