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      Question

      What is the main objective of hedging in financial

      markets?
      A To maximize profits Correct Answer Incorrect Answer
      B To reduce risk Correct Answer Incorrect Answer
      C To increase volatility Correct Answer Incorrect Answer
      D To predict market trends Correct Answer Incorrect Answer

      Solution

      Hedging is a risk management strategy used to offset potential losses in financial investments. It involves taking a position in a related asset to protect against adverse price movements, thereby stabilizing overall financial exposure.

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