n NISM Certifications
X NISM Series X
Medium

Which is NOT a typical purpose of derivatives?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Arbitrage

  2. Long-term investing

    Correct answer

  3. C

    Speculation

  4. D

    Hedging

Why this is the answer

Derivatives are mainly used for risk management (hedging), speculation, or arbitrage, not long-term investing.

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