Suppose That Investments in Derivatives Generated $5 Million of Revenue

question 115

Multiple Choice

Suppose that investments in derivatives generated $5 million of revenue for Domino Grace during this calendar year. The managers who proposed offering derivatives contend that this statistic demonstrates that offering derivatives increased Domino Grace revenues this calendar year by $5 million. Which of the following points out a flaw in this argument?

• A) It assumes that offering derivatives could not have generated less than $5 million.
• B) It claims without warrant that offering derivatives will generate high revenues in future years.
• C) It fails to demonstrate that offering derivatives generated more money than any alternative would generate.
• D) It fails to account for the revenues that could have been generated by alternative uses of the resources that went into offering derivatives.
• E) It ignores the possibility that some investors lost money by investing in derivatives through Domino Grace.

Identify and correctly use different methods of illustrating data, such as frequency distributions, histograms, and frequency polygons.

Determine appropriate class intervals for data distribution.

Appreciate the importance of clear and accurate labeling and scaling in graphical data representation.

Recognize the effect of chart elements (e.g., text and labels) on data communication.

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