The most common strategies for hedging risk by making real investments in assets with offsetting risk are
A) horizontal integration and storage.
B) vertical integration and storage.
C) vertical integration and diversification.
D) horizontal integration and diversification.

Question

Quizplus · Accepted Answer

Vertical integration and storage are common strategies for hedging risk by making real investments in assets with offsetting risk. Vertical integration helps control more stages of the production process, reducing dependency on suppliers or buyers and mitigating risks associated with price fluctuations and supply chain disruptions. Storage allows for the management of inventory levels to hedge against price volatility and supply uncertainties.

The Most Common Strategies for Hedging Risk by Making Real