Hedging risk and spreading risk are two ways to:
A)Increase expected returns from a portfolio
B)Diversify a portfolio
C)Lower transaction costs
D)Match up perfectly positively correlated assets

Question

Quizplus · Accepted Answer

Hedging risk involves taking actions to reduce the impact of potential losses in a portfolio. Spreading risk involves diversifying a portfolio by investing in a variety of assets to reduce the impact of any one asset's performance on the overall portfolio. Both approaches can help manage risk in a portfolio, but spreading risk is generally considered a more effective and sustainable long-term strategy for managing risk.

Hedging Risk and Spreading Risk Are Two Ways To