Final answer:
The futures and forward markets are primarily used for hedging, with futures being exchange-traded and usable by both hedgers and speculators, while forwards are over-the-counter and custom designed, thus often utilized by firms for hedging against currency risks.
Step-by-step explanation:
The correct answer to the question of which statement is true regarding the use of futures and forward markets is C) The futures and the forward markets are primarily used for hedging. Both types of markets allow firms and individuals to manage or hedge their risks associated with fluctuations in prices, currencies, or interest rates. The futures market is an exchange-traded market where parties agree to buy or sell an asset at a future date at a price fixed at the time of the deal. Futures contracts are standardized and typically used by both hedgers and speculators.
The forward market, on the other hand, is an over-the-counter market where contracts are customized between parties to sell or buy an asset at a specified future time at a price agreed upon today. While it can be used for speculation, the forward market is more commonly associated with hedging activity because of its customizable nature that can better suit the hedging needs of firms, like in the example of the U.S. firm exporting to France and seeking to lock in the exchange rate of euros to dollars.