Those Who Invest in Derivative Instruments That Increase Rather Than

question 51

Multiple Choice

Those who invest in derivative instruments that increase rather than reduce risk are known as:

• A) option traders.
• B) futures traders.
• C) hedgers.
• D) speculators.

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Definitions:

Bananas

A type of fruit that is elongated, curved, and covered with a peel, typically yellow when ripe, and consumed as a sweet source of energy.

Perfect Substitute

Goods that can be used in place of one another with no loss of utility for the consumer, indicating a one-to-one substitutability.

Utility Function

A mathematical representation that assigns a level of utility or satisfaction to different bundles of goods, allowing preferences to be compared quantitatively.

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, meaning that the consumer has no preference for one bundle over the other.