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Explain why financial institutions use derivatives such as forwards, futures, swaps and options.
A contract to buy and sell a certain number of certain underlying assets at a certain price. Standardized forward contracts that can be traded with a commodity or financial asset as the subject matter can be jointly invested in a safe way. It is explained that the right to use derivative contracts such as forward contracts, futures contracts, swaps and options is given to financial institutions because contracts for buying and selling a certain number of certain underlying assets at a certain price are projects that must be approved according to law, and the business activities carried out after approval by relevant departments are safe and reliable.