New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    A protection against financial losses in the future is

    called:
    A hedging Correct Answer Incorrect Answer
    B Arbitrage Correct Answer Incorrect Answer
    C Speculation Correct Answer Incorrect Answer
    D Term Insurance Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    A hedger is a person or a fund that hedges, basically. A hedge can be defined as protection against financial losses in the future. There are so many financial products that help hedge against any kind of financial loss. For example, a fund can hedge against inflation, which will reduce the value of the cash holdings, by buying commodities such as gold. Since gold is considered a natural hedge against inflation.

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