The Goal of fiNancial Risk Management as It Relates to Hedging

question 89

Multiple Choice

The goal of financial risk management as it relates to hedging is to:

• A) Increase risk with the hope of earning higher returns.
• B) Totally eliminate all forms of risk.
• C) Totally eliminate financial risk.
• D) Reduce risk to a tolerable level.
• E) Increase the steepness of the risk profile.

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Definitions:

Functionalism

A school of psychology that focused on how mental and behavioral processes function - how they enable an organism to adapt, survive, and flourish.

William James

A philosopher and psychologist who is often referred to as the father of American psychology, known for his work on pragmatism and functionalism.

Gestalt Psychology

A theory of mind and brain positing that the operational principle of the brain is holistic, parallel, and analog, with self-organizing tendencies.

Cognitive Psychology

A branch of psychology that studies mental processes including how people think, perceive, remember, and learn.