What is the key characteristic of the Futures Market?

The key characteristic of the Futures Market is that it allows contracts for future transactions. This market facilitates the buying and selling of contracts that obligate the parties involved to exchange a specific asset at a predetermined price on a set date in the future. This allows participants to hedge against risks associated with price fluctuations of commodities, currencies, or financial instruments. Futures contracts are utilized by a variety of market participants, including speculators and hedgers, to manage their financial exposure effectively.

In contrast, the other options have specific limitations. The Futures Market is not confined to only stocks; it encompasses a broader range of assets, including commodities, currencies, and financial indices. Additionally, it does not solely focus on trading currencies, nor is it dedicated to government securities. This broad functionality is what distinguishes the Futures Market as a vital part of the overall financial landscape, providing tools for risk management and price discovery.