Question

с английским 31.6 Complete the text with the words in the box.

commodity contracts
downside risk
hedging
leverage
underlying asset

Two concepts that are fundamental to modern finance are leverage and hedging.

1.is using borrowed money to buy an investment. You invest €100 of your own money and €100 or €1,000 - of the bank's. This gives you enormous profits if your investment is a good one, but also magnifies the 2.. A lot of leverage in a market increases volatility, If the market moves against you, it's not just your own money you're losing, but the borrowed money as well. So you have to sell shares quickly to minimize losses, and this drives down the market very quickly.

3.means trying to protect yourself against risk. If you hold a lot of shares, foreign currency or 4., you'll clearly make money if the price of the asset goes up. But if the price goes down, you'll lose. You can hedge this risk by buying a derivative that is structured to make money as the price of the 5. falls. So if the market moves against you, at least you have some protection.

Answer 1

1 leverage

2 commodity contracts

3 hedging

4 underlying asset

5 downside risk