Hedging is matching the maturities of assets and liabilities to reduce risk.

Question

Quizplus · Accepted Answer

Hedging involves taking positions in assets or derivatives to offset potential losses from adverse price movements. Matching the maturities of assets and liabilities is one way to reduce risk in a hedging strategy. By doing so, the investor can ensure that the assets will be available to cover the liabilities as they come due, minimizing the risk of default or liquidity shortages.

Hedging Is Matching the Maturities of Assets and Liabilities to Reduce