An example of hedging in order to control risk would be:
A)Car makers reducing the number of models that will be manufactured this year.
B)Toy stores placing orders in December for toys needed by Christmas.
C)Airline companies attempting to lock in the price paid for fuel.
D)Fashion designers offering showings of their new clothing line in several major cities.

Question

Quizplus · Accepted Answer

Airline companies attempting to lock in the price paid for fuel is an example of hedging as they are trying to prevent fluctuations in fuel prices that could affect their profitability. By locking in a price, they have reduced their risk exposure to price changes. The other options, such as reducing the number of models or offering showings in multiple cities, are not necessarily examples of hedging to control risk.

An Example of Hedging in Order to Control Risk Would