Describe two useful purposes served by speculators in derivatives markets
What will be an ideal response?
First, hedgers are able to transfer risk to speculators. In derivatives markets, as in other markets, there must be two parties to a transaction. Second, studies of derivatives markets have shown that speculators provide essential liquidity.
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The LM curve shows a series of income-interest rate combinations at which there is equilibrium in the
A) bond market. B) goods market. C) saving-investment market. D) money market.
Individuals, firms, and societies are limited in the amount of goods and services that they can produce. This is a direct result of:
A. unemployment. B. waste. C. irrational behavior. D. scarcity.
An ideal voting system will not function if a _________ is present, and has the power to enact his or her own preferences.
A. bully B. representative C. consul D. dictator
Water, when it is not tradeable among current and potential users, is often kept that way
a. by governments demanding tight control over who gets the water. b. by nature, as water cannot be easily moved from place to place in large quantities. c. to protect fish and other wildlife, rather than for any other reason. d. by monopoly owners in the private sector.