A trader buying spare stock because prices may rise, purely to protect against that rise, is:
AHousing
BHedging
CHeading
DHoarding
Answer & Solution
Correct answer: B. Hedging
1. The buyer already faces the rising price as a consumer.
2. The purchase offsets that exposure rather than creating one.
3. So the buyer is hedging.
_Source: OpenStax Principles of Finance 2e, Chapter 20, Risk Management and the Financial Manager._
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