One important reason for the existence of derivatives is that they:
A)help lower transactions costs.
B)have valuable tax benefits.
C)contribute to market completeness.
D)are risk-free.

Question

Quizplus · Accepted Answer

Derivatives contribute to market completeness by allowing investors to buy or sell risk exposure, providing opportunities for speculation and hedging, and enabling price discovery for underlying assets. This helps make financial markets more efficient and helps investors manage risk more effectively.

One Important Reason for the Existence of Derivatives Is That