A company that hedges simply passes the risk on to someone else.

Name: A company that hedges simply passes the risk on to someone else.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When a company hedges, they use financial instruments to mitigate their risk. This often involves entering into contracts with other parties, such as insurance companies or other market participants, to shift the risk onto them. Therefore, hedging involves passing the risk on to someone else.

A Company That Hedges Simply Passes the Risk on to Someone