A British firm buys out a US software company to complement their product line. This is an example of
A- carrying out a portfolio investment
B- carrying out a direct investment
C- hedging
Answer:
Option C - Hedge is a right option.
Reason:
A British firm is buying the software firm as a complementary product which will help to the quality of existing product. Such Takeover or an investment will reduce the risk factor in existing firm'
A hedge is an investment that protects you from financial risk situations. Hedging is done to reduce or offset the likelihood that the value of your property will decrease. If the value of the property decreases, it limits your losses to a known extent.
Therefore, Hedging is the right answer.
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