One reason firms manage risk with derivatives is to lower bankruptcy costs.

Name: One reason firms manage risk with derivatives is to lower bankruptcy costs.
Brand: Quizplus
Rating: 4.9 (57 reviews)

Question

Quizplus · Accepted Answer

By using derivatives to manage risk, firms can reduce the likelihood of suffering significant financial losses that could lead to bankruptcy. This ultimately lowers the costs associated with the bankruptcy process, such as legal fees and lost business opportunities.

One Reason Firms Manage Risk with Derivatives Is to Lower