Economics Options And Futures Questions
The role of options and futures in portfolio diversification is to provide investors with additional tools to manage risk and enhance returns. By incorporating options and futures into a portfolio, investors can hedge against potential losses, protect against market volatility, and potentially generate additional income. These financial instruments allow investors to diversify their portfolios by gaining exposure to different asset classes, sectors, or regions, thereby reducing the overall risk of the portfolio. Additionally, options and futures can be used to speculate on price movements, providing opportunities for potential gains. Overall, options and futures play a crucial role in portfolio diversification by offering risk management and investment opportunities.