Of the following, which risk is most likely to be managed with the use of derivative contracts?

Question

Quizplus · Accepted Answer

Derivative contracts are most commonly used to manage market and interest rate risks. These risks relate to the volatility in financial markets and can have a significant impact on an organization's financial performance. By using derivative contracts, such as futures, options, and swaps, companies can protect themselves from fluctuations in interest rates, commodity prices, and currency exchange rates. This helps them to manage their cash flows and to reduce their exposure to market risks. While derivative contracts can also be used to manage other types of risks, such as credit or liquidity risk, they are most commonly used to manage market and interest rate risks.

Of the Following, Which Risk Is Most Likely to Be