The Prudent Use of Derivatives to Hedge, or Reduce Risk

question 22

Multiple Choice

The prudent use of derivatives to hedge, or reduce risk, is similar to the concept of ________________.

• A)gambling
• B)juggling
• C)hiding
• D)insurance
• E)none of the above.

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Definitions:

Disaffirmance

The legal act of renouncing or nullifying a contract or agreement, particularly by minors or those not completely competent to enter into a contract.

Tort of Deceit

A legal wrong involving intentional misrepresentation or concealment of truth leading to damage or harm to another party.

Mental Impairment

A condition affecting an individual's cognitive functions, potentially limiting their ability to perform daily tasks or make decisions.

Disaffirm

To reject or deny the validity or authority of something, especially a contract or agreement.