Derivatives can be used to reduce risk, but they also can be a source of risk in themselves.

Name: Derivatives can be used to reduce risk, but they also can be a source of risk in themselves.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Derivatives such as futures and options can be used to hedge against various risks, but if not used properly, they can also lead to substantial losses and increase risk exposure. Therefore, derivatives can both reduce and increase risk.

Derivatives Can Be Used to Reduce Risk, but They Also