Why Do Companies Hedge to Reduce Risk

question 21

Essay

Why do companies hedge to reduce risk?

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Definitions:

On Approval

A conditional agreement term requiring that an action or decision must be sanctioned or approved by a specified party before it becomes effective.

Sale of Goods Act

Legislation governing the sale of goods, ensuring rights and obligations of buyers and sellers, including product quality and ownership transfer.

Unpaid Seller's Lien

A right granted to sellers allowing them to retain possession of property until they receive full payment, typically used in transactions involving goods.

Conditions and Warranties

Terms specified in a contract that are deemed essential (conditions) and those seen as additional promises (warranties).