Question: A derivative contract is transacted between a hedger and a speculator. What is the impact of the transaction on the risk profile of these two

  1. A derivative contract is transacted between a hedger and a speculator. What is the impact of the transaction on the risk profile of these two parties?
    1. It increases the risk to both parties
    2. It decreases the risk to both parties
    3. It increases risk of the hedger and decreases risk of the speculator
    4. It decreases risk of the hedger and increases risk of the speculator

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