As per the RBI, the definition of hedging includes

Q: Answer-As per the RBI, the definition of hedging includes mitigating which type of risk?

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 .

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 .

Practice Next

Relevant for Exams:

RBI Grade B

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