Question
When they are employed wisely, derivatives make the world simpler, because they give their buyers an ability to manage and transfer risk. But in the
When they are employed wisely, derivatives make the world simpler, because they give their buyers an ability to manage and transfer risk. But in the hands of speculators, bumblers, or unscrupulous peddlers, they are a powerful leveraged mechanism for creating risk, from Untangling the Derivatives Mess, Fortune. Critically evaluate the above statement in the context of any case(s) with which you are familiar. (i) Outline the trading strategy responsible for the losses in each case and (ii) Discuss the main lessons that you believe should be learned from the cases in question.
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