Identify the noninsurance instruments used to hedge, or protect, against adverse movements in prices in stocks or in commodities such as rice and wheat or rates such as interest rates or foreign exchange rates.
A)Mutual funds
B)Derivatives
C)Covenants
D)Hedge funds
E)Annuities

Question

Quizplus · Accepted Answer

Derivatives, such as futures, options, and swaps, are financial instruments that derive their value from an underlying asset or benchmark. They are specifically designed to hedge against price volatility in various markets, including stocks, commodities, interest rates, and foreign exchange rates.

Identify the Noninsurance Instruments Used to Hedge, or Protect, Against