Which of the Following Represents Potential Ethical Challenges Associated with Prediction

question 2

Multiple Choice

Which of the following represents potential ethical challenges associated with prediction markets?

• A) Artificial inflation of product prices
• B) Money-laundering
• C) High-interest financing
• D) Confiscation by government agencies
• E) An insider trading information

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Definitions:

Forward Exchange Contract

A financial agreement between parties to exchange currencies at a predetermined future date and rate.

Annual Interest Rate

The percentage of interest that will be earned or paid on investments or loans over a one-year period.

Foreign Currency Option

A financial contract which grants the owner the option, without being obliged, to convert funds in one currency to another at a set exchange rate on a determined date.

Strike Price

The predetermined price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying asset or security.