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.

Question

Quizplus · Accepted Answer

The primary goal of financial risk management, especially in the context of hedging, is to reduce risk to a level that is considered tolerable or manageable by the organization, not to eliminate risk entirely or to increase it.

The Goal of Financial Risk Management as It Relates to Hedging