Unless the corporation has reason to believe that the odds are stacked in its favor,it should use derivatives for speculation,not for hedging.

Question

Quizplus · Accepted Answer

This statement is incorrect. Derivatives can be used for both speculation and hedging purposes. It is important for corporations to have a clear understanding of the risks they are taking on when using derivatives for speculative purposes and to have appropriate risk management strategies in place. Hedging with derivatives allows corporations to mitigate their exposure to market fluctuations and protect against potential losses.

Unless the Corporation Has Reason to Believe That the Odds