Hedging is designed primarily to reduce a firm's:
A) Profits on a trade.
B) Market position.
C) Net income.
D) Exposure to price or rate changes.
E) Transaction costs.

Question

Quizplus · Accepted Answer

Hedging is a financial strategy used by firms to reduce or eliminate their exposure to unwanted risk from price or rate changes in the market. It is not primarily aimed at reducing profits, market position, net income, or transaction costs, although these factors can be indirectly affected.

Hedging Is Designed Primarily to Reduce a Firm's