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CFA Level 3
Portfolio Management and Wealth Planning

Using Derivatives for Risk Mitigation

Very Easy Risk Management Derivatives In Risk Management

ABC Investment Group manages a variety of portfolios, including those that utilize derivatives for risk management. The portfolio manager is explaining to a junior analyst how derivatives can be used to mitigate risks associated with stock market fluctuations. The analyst is curious about which derivative is most commonly used to provide protection against potential declines in the value of equity investments.

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