A Speculator's Objective Is to

question 36

Multiple Choice

A speculator's objective is to

• A) reduce pre-existing risks.
• B) take delivery of the underlying.
• C) take advantage of information asymmetry.
• D) maximize potential returns by being exposed to greater risks.

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Definitions:

Markup

The amount added to the cost price of goods to cover overhead and profit.

Desired Profit

The target profit a business aims to achieve within a specific period.

Total Fixed Manufacturing

The summation of all the costs that do not change with the level of production, including salaries, rent, and insurance.

Profit Margin

A component of the rate of return on investment, computed as the ratio of income from operations to sales.