Question: In class we discuss that given a choice between liquidity and basis risk, futures markets chose institutional arrangements that favored liquidity. Who is most impacted
In class we discuss that given a choice between liquidity and basis risk, futures markets chose institutional arrangements that favored liquidity. Who is most impacted by this choice and why do you think maximizing liquidity is more important than minimizing basis risk?(Please explain in detail)
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The choice between liquidity and basis risk in futures markets primarily impacts market participants particularly hedgers and speculators Hedgers such ... View full answer
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