Farmer Jones raises several hundred acres of corn and would suffer a significant loss should the price of corn decline at harvest time.Which one of the following would he be doing if he purchased financial securities to offset this price risk?
A)abating
B)deriving
C)hedging
D)forwarding
E)manipulating

Question

Quizplus · Accepted Answer

Farmer Jones would be hedging by purchasing financial securities to offset the price risk. Hedging involves taking an opposite position in the market to reduce risk, which in this case would be purchasing financial securities to offset a potential decline in the price of corn.

Farmer Jones Raises Several Hundred Acres of Corn and Would