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:

Culture

The social behavior and norms found in human societies, including knowledge, beliefs, arts, laws, customs, and habits.

Science

A systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe.

Unconscious Conflicts

Internal struggles often stemming from childhood that manifest in the unconscious mind, influencing behavior and emotions.

Psychoanalysis

A therapeutic approach developed by Sigmund Freud that seeks to explore unconscious motivations and conflicts as they manifest in behavior.