Which of the following is NOT a motivation for hedging?

Question

Quizplus · Accepted Answer

Hedging is primarily used to manage risk, not to offset the costs of insurance. It involves using financial instruments to reduce exposure to various risks (e.g., currency, interest rate, commodity price risks). The other options (A, B, D) are indeed motivations for hedging: reducing financial distress costs, enhancing manager evaluation by reducing risk-related performance variability, and potentially reducing tax liabilities through more stable earnings.

Which of the Following Is NOT a Motivation for Hedging