Which of the Below Statements Is FALSE

question 52

Multiple Choice

Which of the below statements is FALSE?

• A) The key role of futures contracts is that, in a well-functioning futures market, these contracts provide a more efficient means for investors to alter their risk exposure to an asset.
• B) A futures market will be the price discovery market when market participants prefer to use this market rather than the cash market to change their risk exposure to an asset.
• C) The futures market and the cash market for an asset are drawn apart by an arbitrage process.
• D) The argument that futures markets destabilize the prices of the underlying financial assets is an empirical question, but greater price volatility by itself is not an undesirable attribute of a financial market.

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Definitions:

Dispositional

Pertaining to one's inherent qualities of mind and character, often used in psychology to describe an individual's tendencies or personality traits.

Uncontrollable

Refers to events or processes that cannot be easily managed or influenced by individuals.

Self-Serving Bias

A cognitive bias that leads individuals to attribute their successes to internal factors while blaming external factors for their failures.

Differential Forgetting

Refers to the phenomenon that different types of information are forgotten at different rates, often influenced by the relevance, emotional impact, and repetition of the information.