____________ is the process of reducing a ﬁrm's exposure to price or rate ﬂuctuations.

Question

Quizplus · Accepted Answer

Hedging is the process of reducing a firm's exposure to price or rate fluctuations by taking positions in the market that will counterbalance potential losses in their existing positions. This can be done through various financial instruments such as futures, options, and swaps. Volatility refers to the degree of fluctuation in prices or rates. Diversification involves spreading a firm's investments across different asset classes, industries, or regions to minimize risk. Value minimization is the process of cutting costs and maximizing efficiency to increase profitability. Translation involves converting financial statements from one currency to another to account for changes in exchange rates.

____________ Is the Process of Reducing a ﬁRm's Exposure to Price