chose the correct answer Hedging is 1buying derivatives to t

chose the correct answer:

Hedging is:

1-buying derivatives to take advantage of likely changes in the market

2-buying a company\'s own share

3-insuring against risks a company likely faces

4-making sure that the hedges at company headquarters are well-pruned

Solution

Hedging is:

The purchase of company’s own share is the buyback of shares. Also, the insurance of the risks of the company is the risk management. And hedging is not referring to the hedges at the company headquarters which are well pruned.

Hedging can be done by using different derivatives like futures, options for protection against adverse price movements.