What Is Hedging

question 77

Multiple Choice

What is hedging?

• A) It is a method of leveraging returns when a company has foreign currency receivables or payables or has outstanding commitments that will be affected by changes in market prices.
• B) It is a system for investing in financial instruments such that the entity is guaranteed increased returns and lower risks.
• C) It is any activity, entered into by the entity, designed to increase returns and reduce risk.
• D) It is an action taken with the object of avoiding or minimising possible adverse effects of movements in things such as exchange rates or market prices.

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Definitions:

Parietal Lobe

A region of the brain located at the upper back area in the skull, crucial for processing sensory information from various parts of the body, understanding spatial orientation, and navigation.

Frontal Lobe

The part of the brain located at the front of the cerebral cortex, responsible for executive functions such as decision-making, problem-solving, and controlling behavior and emotions.

Occipital Lobe

The region of the cerebral cortex located at the back of the brain, responsible for processing visual information.

Prefrontal Cortex

The part of the brain located at the front of the frontal lobe, responsible for decision-making, problem-solving, and regulating behavior.