Although derivatives can be used as speculative instruments,businesses most often use them to

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Businesses most often use derivatives as a hedge to manage or mitigate risks associated with fluctuations in financial markets, commodities prices, interest rates, and foreign exchange rates. This helps them reduce volatility and uncertainty in their operations and improve their financial stability. While derivatives can also be used for speculative purposes, hedging is their primary use for businesses.

Although Derivatives Can Be Used as Speculative Instruments,businesses Most Often