alleryStart learning →The basic reason firms hedge is to protect themselves against:
AListings
BLosses
CLenders
DLicences
Answer & Solution
Correct answer: B. Losses
1. Prices and rates can move against a business.
2. Hedging limits the damage when they do.
3. So firms hedge against losses.
_Source: OpenStax Principles of Finance, Chapter 20, Risk Management and the Financial Manager._
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