Which of the Following Statements Regarding Why No Futures Market

question 18

Multiple Choice

Which of the following statements regarding why no futures market exists for diamonds is INCORRECT?

• A) Diamond sellers,led by South African diamond manufacturing conglomerate De Beers,have acted as an effective cartel.
• B) Diamonds are hard to standardize.
• C) Price volatility is largely controlled by the De Beers-led cartel,which kills any incentive for hedgers and speculators to participate.
• D) There is no hedging demand from firms using diamonds for jewelry production.
• E) Given the market structure,a futures contract fails to play a price discovery role in the diamond market.

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