This article appears courtesy of DailyII.com
By Pierre Paulden 08/13/06
Derivatives markets were born in the 1840s, when grain farmers discovered that Chicago’s storage centers were too full to accommodate booming harvest-season supplies, yet lay empty in the spring. To guard against resulting price swings, farmers and speculators entered into contracts that locked in prices for future delivery.
Risk management has come a long way since then. Today corporations use an array of derivatives to guard against volatility in commodity prices, interest rates, currency values and even weather.
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