The process in which derivatives are used to reduce risk exposure is called hedging or speculation

Business

1 answer:

natulia [17]3 years ago

7 0

Answer:

It is called hedging.

Explanation:

Hedging is a financial technique for reducing the risk exposure in financial instruments. Essentially, a hedge is a financial instrument that is used to offset the risks of adverse price movements in another financial instrument. The purpose is to reduce to a bearable minimum the adverse effects of risk exposures brought by the initial investment.

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