An example of hedging to control risk would be ____.
A) car makers reducing the number of models that will be manufactured this year
B) toy stores placing orders in December for toys needed by Christmas
C) airline companies attempting to lock in the price paid for fuel
D) fashion designers offering showings of their new clothing line in several major cities

Question

Quizplus · Accepted Answer

Hedging is a strategy used to control risk, and locking in the price of fuel is a classic example of this. By hedging, the airline company can ensure that they will not be affected by sudden market changes in the price of jet fuel. The other options (A, B, D) do not involve hedging to control risk.

An Example of Hedging to Control Risk Would Be ____