Hedging is a technique used by investors to:

Question

Quizplus · Accepted Answer

Hedging is a risk management strategy that involves taking an offsetting position in a financial instrument. By doing so, an investor can reduce the risk of their portfolio without necessarily affecting the rate of return. The goal of hedging is to stabilize the value of the portfolio of assets, rather than increase the rate of return or reduce risk and increase return simultaneously. Therefore, option A and B are not accurate. Option D is partially correct but not the best answer as hedging does not aim to increase the rate of return but to stabilize the value of the portfolio of assets. Option E is incorrect as hedging is a widely used technique by investors.

Hedging Is a Technique Used by Investors To