Question

In what situation do investors use derivatives for speculation?

a.

When they want to hedge currency risks.

b.

When they need to contain exposure to the underlying.

c.

When they expect the value of the underlying asset to move as they anticipate.

d.

When they aim to avoid large losses.

Answer: (c).When they expect the value of the underlying asset to move as they anticipate. Explanation:Investors use derivatives for speculation when they anticipate the value of the underlying asset to move in a way they expect.

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Q. In what situation do investors use derivatives for speculation?

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