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28 March, 16:32

Farmer Jones raises several hundred acres of corn and would suffer a significant loss should the price of corn decline at harvest time. Which one of the following would he be doing if he purchased financial securities to offset this price risk? A. abatingB. derivingC. hedgingD. forwardingE. manipulating

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  1. 28 March, 18:42
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    The correct answer is C. hedging.

    Explanation:

    Coverage, in finance, is the set of operations aimed at canceling or reducing the risk of a financial asset or liability in the possession of a company or an individual. Funds created for this purpose are called hedge funds.

    The hedging operations consist of the acquisition or sale of a financial asset that is correlated with the element on which the coverage is to be established. Said acquisition or sale may be of shares, indices, interest rates, options, futures, etc.
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Home » Business » Farmer Jones raises several hundred acres of corn and would suffer a significant loss should the price of corn decline at harvest time. Which one of the following would he be doing if he purchased financial securities to offset this price risk? A.
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