Question

    As per the RBI, the definition of hedging includes

    mitigating which type of risk?
    A Identifiable and measurable risk Correct Answer Incorrect Answer
    B Identifiable and insurable risk Correct Answer Incorrect Answer
    C Identifiable and controllable risk Correct Answer Incorrect Answer
    D Identifiable and unpredictable risk Correct Answer Incorrect Answer
    E Identifiable and specific risk Correct Answer Incorrect Answer

    Solution

    The Master Direction – Foreign Exchange Management ( Hedging of Commodity Price Risk and Freight Risk in Overseas Markets ) Directions, 2022 . Hedging – The activity of undertaking a derivative transaction to reduce an identifiable and measurable risk . For the purpose of these directions, the relevant risks are commodity price risk and freight risk .

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