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    Risk Management and Insurance Study Set 1
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    Exam 5: Risk-Handling Techniques: Diversification and Hedging
  5. Question
    Why Are Derivatives Effective Instruments for Hedging
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Why Are Derivatives Effective Instruments for Hedging

Question 14

Question 14

Multiple Choice

Why are derivatives effective instruments for hedging?


A) They are negatively correlated with the firm's underlying risk.
B) There are so many of them.
C) They enhance the risk pool.
D) All of the above are correct.

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