In many cases, there are misconceptions about their ability to provide superior results in different kinds of market conditions. Yet, there are times, when these tools have been successful in helping investment managers and professionals to exploit these disparities. In this case, more research is needed to show why so many investors believe. That hedging and derivatives are important tools in providing superior returns.

However, Qiao (2012) found that hedging strategies will vary depending upon the levels of risk investors are seeking out. This means that they will more than likely will use derivatives to reduce threats in areas such as equity securities. Whereas, those who want to obtain higher returns will utilize derivates to increase their percentage gains. (Qiao, 2012)

The information from this source is useful in demonstrating how different classes of investors' will have contrasting attitudes and uses for derivates in relation to hedging. However, to provide...
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