If Investors Speculate in Derivative Contracts Rather Than in the Underlying

question 40

Multiple Choice

If investors speculate in derivative contracts rather than in the underlying asset, they will probably achieve ____ returns, and they are exposed to relatively ____ risk.

• A)lower; lower
• B)lower; higher
• C)higher; lower
• D)higher; higher

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Definitions:

Bystander Effect

A phenomenon identified in social psychology that indicates people are less willing to help a victim when they are not alone, but in the company of others.

Darley And Latané

Psychologists known for their research on the bystander effect, which examines why individuals do not always help others in distress when other people are present.

Critical Thinking

The process of actively analyzing, interpreting, synthesizing, and evaluating information to reach a conclusion.

Principles

Fundamental truths or propositions that serve as the foundation for a system of belief or behavior.