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Review:

Derivatives

overall review score: 4.2
score is between 0 and 5
Derivatives are financial instruments whose value is derived from an underlying asset or group of assets.

Key Features

  • Leverage
  • Hedging
  • Speculation
  • Risk management

Pros

  • Can be used for hedging against market fluctuations
  • Provide opportunities for speculation and profit
  • Allow for leverage to magnify investment returns

Cons

  • High risk due to leverage
  • Complexity and potential for mispricing
  • Regulatory scrutiny and oversight

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Last updated: Mon, Feb 3, 2025, 01:49:50 AM UTC