The most important reason to hedge business risk is to reduce ____.

Question

Quizplus · Accepted Answer

Hedging business risk helps to minimize the likelihood of financial distress, such as bankruptcy or insolvency, which can have severe consequences for a business. By reducing the level of risk, a company can maintain stability and increase the chances of long-term profitability. Hedging does not directly address issues such as employee theft or management inaccuracies, although it may indirectly help to prevent these problems by strengthening the financial position of the business. The chance of a business takeover is also not directly related to risk hedging.

The Most Important Reason to Hedge Business Risk Is to Reduce