Derivative securities vary in risk levels and are not necessarily the least risky financial securities.
Derivative securities are financial instruments used for trading risks and typically do not represent the least risky securities. They involve complexities and are designed to hedge or speculate on risks, thus varying in risk levels based on the type of derivative.
For example, derivative securities such as credit-default swaps and foreign exchange futures contracts are considered higher risk due to their speculative nature, unlike U.S. Treasury Bonds which are deemed safer with a lower return.
Therefore, it is false to claim that derivative securities are the least risky financial securities as their risk levels depend on the specific derivative being traded.
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