Which of the following, if true, makes it prudent for Jorge to take Fe

QUESTION

Which of the following, if true, makes it prudent for Jorge to take Felicia’s advice?

A) If Jorge doubles his investment, he will be able to make a down payment on a sports car he really wants to own.
B) Jorge wishes he had taken a chance on purchasing a platinum contract last year, which would have been very profitable.
C) Jorge lives in Chicago, where most of the country’s options and futures contracts are bought and sold.
D) Jorge has friends in Colombia who tell him that the coffee harvest this year promises to be unusually bad.
E) Jorge is a very conservative investor who prefers to buy and sell securities with a low level of risk.

ANSWER

Answer: D
Explanation: D) The key to successful commodities trading is the ability to predict which products may be scarcer than usual on the market. So Choice D is correct: If Jorge’s information is correct, then coffee beans may well be about to rise in price, making a futures contract in them profitable. Choices A and B might provide personal incentives for Jorge to experiment with this kind of investment, but they do not guarantee that his choices are wise ones. Choice E, in fact, discourages him from doing so. Choice C is a general fact that does not bear on the advice, as commodity trading can be done electronically.