The goal of ﬁnancial risk management as it relates to hedging is to:

Question

Quizplus · Accepted Answer

The goal of financial risk management through hedging is to reduce risk to a tolerable level, not to eliminate all forms of risk or increase risk with the hope of earning higher returns. Eliminating financial risk completely may not be realistic or necessary, as some level of risk is inherent in any investment. Increasing the steepness of the risk profile is not a goal of risk management, but rather a potential outcome.

The Goal of ﬁNancial Risk Management as It Relates to Hedging