A Derivative Contract Is Transacted Between a Hedger and a Speculator

Multiple Choice

A derivative contract is transacted between a hedger and a speculator. What is the impact of the transaction on the risk profile of these two parties?

A) It increases the risk to both parties.
B) It decreases risk in both cases.
C) It increases risk of the hedger and decreases risk of the speculator.
D) It reduces the risk of the hedger and increases the risk of the speculator.