Why do investors hedge using futures contracts?
A) they are seeking to increase liquidity
B) they are willing to pay for a reduction in risk
C) in order to provide a counterparty to speculators
D) they are more flexible than forward contracts
B
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Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2012 and 2016
A) 30% B) 50% C) 66.7% D) 100%
Why is the price elasticity of demand a relative measure? That is, why is elasticity measured in percentage terms rather than in absolute terms?
A) So the coefficient of elasticity will not be dependent on the physical units of the good. B) Because absolute measures do not account for the direction of the change in quantity. C) So that the coefficient of elasticity will not be negative. D) Because the absolute price or quantity demanded of a product is irrelevant to the elasticity measure.