The greatest risk in energy derivatives trading comes from:

The greatest risk in energy derivatives trading comes from:
A . interest rate risks
B . risk of default by derivatives’ counterparties
C . hedging risk
D . price volatility

View Answer

Answer: D

Explanation:

Energy derivative markets are still not very liquid, and experience high price volatility. This high volatility is responsible for most of the risk in these markets. Choice ‘d’ is the correct answer.