Hedging refers to any financial process that lessens financial risk.

Question

Quizplus · Accepted Answer

Hedging is the practice of using financial instruments such as futures contracts, options, or derivatives to reduce the risk of adverse price movements in an asset. This can be done to reduce the risk of losses in a portfolio or to protect against fluctuations in currency prices, interest rates, or commodity prices, among other things. Therefore, hedging does refer to any financial process that lessens financial risk.

Hedging Refers to Any Financial Process That Lessens Financial Risk