Generally, hedging transactions are
A)negative NPV transactions.
B)positive NPV transactions.
C)zero-NPV transactions.
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

Hedging transactions are designed to reduce risk, so they are typically structured as zero-NPV transactions, meaning that they have no net present value. The goal of the hedging transaction is not to make a profit, but rather to offset potential losses in another position or transaction. Therefore, the answer is C, zero-NPV transactions.

Generally, Hedging Transactions Are