Derivative contracts provide ________.

Question

Quizplus · Accepted Answer

Derivative contracts provide issuers and investors with an inexpensive way of controlling some major risks by allowing them to transfer the risk to a third party through a contract. While the contracts themselves may have costs associated with them, they are generally less expensive than other methods of controlling risk such as buying physical assets or insurance. Therefore, option B is the best choice as it accurately describes the benefits of derivative contracts.

Derivative Contracts Provide ________