📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!


    Question

    If a company uses derivatives to protect itself from

    price fluctuations, the strategy is known as:
    A Speculation Correct Answer Incorrect Answer
    B Hedging Correct Answer Incorrect Answer
    C Arbitrage Correct Answer Incorrect Answer
    D Leveraging Correct Answer Incorrect Answer

    Solution

    • Hedging reduces or eliminates risk. • Derivatives like futures/options/swaps lock or insure prices. Speculation ↑ risk; arbitrage exploits mispricing; leveraging increases exposure.

    Practice Next

    Relevant for Exams:

    ask-question