Economics · Financial Derivatives
Which of the following is a key function of derivatives related to risk management?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Derivatives eliminate all types of financial and market risks associated with the underlying asset.
- 2Derivatives are primarily used for speculative purposes, without offering any risk management benefits.
- 3Derivatives allow the buyer to hedge against risk, transferring the risk to another party, thus acting as an effective risk management tool.✓
- 4Derivatives shift the risk from the seller of the product to the buyer, making it a risky investment.
Correct answer
Derivatives allow the buyer to hedge against risk, transferring the risk to another party, thus acting as an effective risk management tool.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Financial Derivatives MCQs →Want more practice questions on Financial Derivatives?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Financial Derivatives