Use of derivatives Reduced transaction costs a Low-cost way to effect a transaction Mutual-fund mangers wish to sell stocks and buy bonds Paying fees and trading costs Futures contracts have low costs Charles caoCharles Cao 9 Use of Derivatives ◼ Reduced transaction costs ◼ Low-cost way to effect a transaction ◼ Mutual-fund mangers wish to sell stocks and buy bonds ◼ Paying fees and trading costs ◼ Futures contracts have low costs