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What are the types of loss that are dealt with through the use of hedging in...

What are the types of loss that are dealt with through the use of hedging in a financial risk management?

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Answer #1

Ans.1. There are various types of loss that are deal with through the use of hedging in a financial risk management:

Financial loss: An investers are likely to loss all his/her investment while deal with use of hedging.

Foreign exchange loss: Due to unstability in foreign exchange rate, use of hedging is not able to get any return.

Interest rate loss: Due to market instability, interest rate are likely to change, hedging does not work in every cases.

Reputation loss: An investers are left that market if they get continously losing their money.

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