Volatility is a source of risk and thus creates the need for risk-management instruments.

Name: Volatility is a source of risk and thus creates the need for risk-management instruments.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Volatility refers to the degree of fluctuation in the price of a financial instrument. This fluctuation increases the uncertainty and risk associated with investing in such instruments. Therefore, risk-management instruments such as options and futures are used to manage this risk.

Volatility Is a Source of Risk and Thus Creates the Need