Hedging Is Designed Primarily to Reduce a fiRm's

question 283

Multiple Choice

Hedging is designed primarily to reduce a firm's:

• A) Profits on a trade.
• B) Market position.
• C) Net income.
• D) Exposure to price or rate changes.
• E) Transaction costs.

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Definitions:

Government Ownership

The situation in which assets, enterprises, or industries are owned and operated by the government rather than private individuals or companies.

Mean of Production

Likely a typographic error intended to refer to "Means of Production," which are the resources (such as land, labor, and capital) used to produce goods and services.

Central Planning

An economic system where the government or a central authority makes all decisions regarding the production and distribution of goods and services.

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.