Hedging is the use of
A) derivatives or other instruments to increase returns.
B) derivatives or other instruments to offset risks.
C) debt to offset risks.
D) forward contracts.

Question

Quizplus · Accepted Answer

Hedging involves using derivatives or other instruments to offset risks by establishing a position to protect against potential losses in another position. It does not necessarily increase returns or involve the use of debt or forward contracts.

Hedging Is the Use of