Suppose that investments in derivatives generated $5 million of revenue for Domino Grace during this calendar year. The managers who proposed offering derivatives contend that this statistic demonstrates that offering derivatives increased Domino Grace revenues this calendar year by $5 million. Which of the following points out a flaw in this argument?

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Quizplus · Accepted Answer

D) The investments generated money, but it must have taken some effort and resources to generate that money. If those efforts and resources had been devoted to some other project, then that project could have made some money, too. The managers ignore this and so commit this flaw in Choice D. Choices A and B would have been bogus claims, but the managers don't make those claims. Choice C goes too far. Choice E doesn't describe a flaw because the statistic describes what Domino Grace earned and not what the investors made on these investments.

Suppose That Investments in Derivatives Generated $5 Million of Revenue