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What are derivatives? How can derivatives be used to reduce risk? Can derivatives be used to increase risk? Explain thoroughly.
Step by step
Solved in 2 steps
- Forwards and Futures: How are forwards and futures similar? How are they different? Briefly explain Advantages/Risks: What are the advantages and risks associated with these derivative instruments?What are the implications of interest rate parity theorem.What is the importance of market risk premium?
