Economics · Financial Markets
Derivatives as a tool can be effectively utilized to explore new frontiers in risk management and improve institutional profitability. Which of the following are the primary functions of derivatives in a modern financial system? 1. Price Discovery based on future expectations 2. Transfer of risk to those willing to bear it 3. Increase in market transaction costs 4. Enhancement of market liquidity 5. Provision of speculative opportunities for all 6. Reduction of overall market volatility Select the correct option:
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- 11, 2, and 4 only✓
- 21, 2, 3, and 6 only
- 31, 3, 5, and 6 only
- 41, 2, 3, 4, 5, and 6
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1, 2, and 4 only
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