Hedging Is

question 265

Multiple Choice

Hedging is:

• A) Plotting how the value of a firm is affected by changes in prices.
• B) An option that gives the owner the right, but not the obligation, to buy an asset at a specific price up to a specific point in time.
• C) A financial asset that represents a claim on a different type of asset.
• D) Reducing a firm's exposure to rate and price fluctuations.
• E) Plotting the potential gains and losses incurred as a consequence of price changes.

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Definitions:

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