Question

Give three examples of risks that cannot be hedged.

Answer 1

Three example of risk which cannot be hedged-

A. risk related to political uncertainty and change in government can never be hedged as there will be complete change of government under some economic circumstances and there are no hedging contracts available to get through these risk

B. Risk related to natural calamity which can seriously damage those stocks which are exposed in that area so it cannot be hedged either.

C. Risk related to change of the taxation policy of the government are also not hedged as these will be related to to change in the regulatory measure and taxation policy.