menu search
brightness_auto
Ask or Answer anything Anonymously! No sign-up is needed!
more_vert
What is the role of derivatives in risk management?

4 Answers

more_vert
Derivatives are financial instruments that are used to manage risk. They can be used to hedge against price movements in the underlying asset, as well as to speculate on the future price of the asset. Derivatives can also be used to reduce counterparty risk, as well as to create synthetic exposures to assets that would otherwise be difficult or impossible to access.
thumb_up_off_alt 0 like thumb_down_off_alt 0 dislike
more_vert
Derivatives are financial instruments that are used to manage, transfer or mitigate risks associated with various investments or financial transactions. They allow businesses and investors to manage their market, credit, interest rate, and foreign exchange risks. Derivatives can be used to hedge against potential losses from unfavorable market movements, but they can also be used to speculate and take on additional risk.
thumb_up_off_alt 0 like thumb_down_off_alt 0 dislike
more_vert
Derivatives play a crucial role in risk management by allowing individuals and businesses to hedge against potential price fluctuations, manage exposure to various financial risks, and create customized risk management strategies through the use of derivative contracts.
thumb_up_off_alt 0 like thumb_down_off_alt 0 dislike
more_vert
Derivatives in risk management:

1. Safeguarding against price fluctuations.

2. Revealing price and making well-informed choices.

3. Gambling for potential gains.

4. Shifting of risk to other entities.

5. Broadening portfolio for risk reduction.

6. Exploiting price discrepancies through arbitrage opportunities.
thumb_up_off_alt 0 like thumb_down_off_alt 0 dislike
Welcome to Answeree, where you can ask questions and receive answers from other members of the community.
...