Question

what is uses of darivaties ?​

Answer 1

Answer:

Derivatives can be used in a variety of ways: to hedge a position, to speculate on the future price movement of an asset, or to give leverage. Historically, derivatives were created to facilitate global trade across different currencies.

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Answer 2

Step-by-step explanation:

Derivatives can be used in a variety of ways: to hedge a position, to speculate on the future price movement of an asset, or to give leverage.

Historically, derivatives were created to facilitate global trade across different currencies. As goods were more frequently traded across borders, the need for a balanced exchange rate system became vital, as traders across the world needed a process to help them manage price differences dependent on currency. If, for example, a British investor whose accounts were in sterling wanted to purchase shares of a US company using dollars, they would be exposed to exchange rate risk – the value of the pound may drop or rise against the dollar across the period of investment, affecting the value of their investment. To eliminate this risk, the investor could buy a currency derivative in order to secure a fixed exchange rate and secure their funds.