Which of the following could be an example of hedging? Select all that apply:
A)Buying futures on oil
B)Hiring a strategy consultant
C)Protecting against fluctuating exchange rates
D)Changing back-office processors

Question

Quizplus · Accepted Answer

Protecting against fluctuating exchange rates and buying oil futures could be hedging against business risk.
Key Takeaway: Hedging is important to smoothing earnings and ensuring consistent cash flow. For instance, Southwest Airlines has protected itself by purchasing contracting for jet fuel at a set price to protect against fluctuating prices.

Which of the Following Could Be an Example of Hedging