Which of the following is not generally considered a benefit of hedging?
A) It reduces one or more aspects of business risk.
B) It allows prices to be locked in advance.
C) The costs of hedging are paid by the speculators.
D) It can stabilize profits.

Question

Quizplus · Accepted Answer

The costs of hedging are not paid by speculators, but by the company or individual seeking to hedge their risk. Hedging comes with its own costs, such as fees and the potential for missed opportunities if the market moves in a more favorable direction than predicted.

Which of the Following Is Not Generally Considered a Benefit