Firms regularly use the following to reduce risk:
I.currency options
II.interest-rate options
III.commodity options
A)I only
B)II only
C)III only
D)I, II, and III

Question

Quizplus · Accepted Answer

Firms use all three types of options (currency, interest rate, and commodity) to reduce risk. Each type of option helps the firm hedge against different types of market risk. For example, currency options can be used to protect against foreign exchange risk, interest-rate options against changes in interest rates, and commodity options against fluctuations in commodity prices. By using these options, firms can reduce their exposure to market volatility and protect their profits.

Firms Regularly Use the Following to Reduce Risk