Which of the Following Statements Is Normative

question 8

Multiple Choice

Which of the following statements is normative?

• A)Scientists should not make normative statements.
• B)Warts are caused by handling toads.
• C)As e-book prices fall,people buy more of them.
• D)If income increases,sales of luxury goods fall.
• E)There is more caffeine in a cup of tea than in a cup of coffee.

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Definitions:

Forward Contract

A bespoke arrangement between two parties for acquiring or disposing of an asset at a designated price on an upcoming date.

Hedge

An investment made to reduce the risk of adverse price movements in an asset.

Speculative Forward Contract

A financial derivative used to speculate on the future price of an asset, involving an agreement to buy or sell the asset at a future date for a price determined today.

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.