Derivatives Q49

0. Which of the following is most likely to be a criticism of the derivatives market?

  • Option : B
  • Explanation : The criticism to derivatives is that they are ‘too risky’ especially to investors with limited knowledge of complicated instruments. Derivative markets do provide price information but also lower transaction costs. Moreover, default risk is not existent in all instruments. With exchange traded instruments such as options and futures there is virtually no default risk
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