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:

Closed Shop

A labor arrangement whereby all employees must be members of a specific union before being hired, typically agreed upon through union and employer negotiations.

Taft-Hartley Act

A United States federal law that restricts the activities and power of labor unions.

Outlawed

Describes something that has been prohibited or made illegal by law or regulatory authority.

Norris-LaGuardia Act

A 1932 United States federal law that limited the power of federal courts to issue injunctions in nonviolent labor disputes, thereby protecting the right of workers to organize and strike.