Firms regularly use the following to reduce risk:

Question

Quizplus · Accepted Answer

Using currency options, interest-rate options, and commodity options allows firms to cover various areas of risk management. Currency options help to hedge against volatile currency exchange rates, interest-rate options help firms to manage interest-rate risk, and commodity options allow for hedging against price fluctuations in commodities such as oil or wheat. By using all three options, firms can manage a wide spectrum of risk and create a diversified risk management strategy.

Firms Regularly Use the Following to Reduce Risk