Derivatives can be employed to take on more risk or to reduce risk.

Name: Derivatives can be employed to take on more risk or to reduce risk.
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Question

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Derivatives, such as options and futures, can be used to take on more risk by leveraging positions or speculating on market movements. They can also be used to reduce risk through hedging strategies, such as buying a future to fix the price of a commodity or using options to limit potential losses on a stock position.

Derivatives Can Be Employed to Take on More Risk or to Reduce