Explain How Hedging Affects Risk and Return

question 61

Essay

Explain how hedging affects risk and return.Use a diagram to stress your points.In your answer differentiate between routine hedging and hedging selectively.

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Definitions:

State Governments

The governing bodies of individual states within a federal system, responsible for local laws, policies, and administration.

Fourteenth Amendment

An amendment to the U.S. Constitution, ratified in 1868, granting citizenship to all persons born or naturalized in the United States and guaranteeing all citizens equal protection of the laws.

Carpetbagger

A derogatory term originally used to describe Northerners who moved to the South after the American Civil War to profit from the Reconstruction.

Maine

The northeasternmost state in the United States, known for its scenic coastlines, lighthouses, and as a major producer of lobsters.