Question

Which of the following statements is correct? Choose all that are correct.

Survey results show that not all risks that were managed were completely removed.

Firms rarely use derivatives as a risk management tool due to its high risk.

Firms use standard risk management techniques, such as inventory holdings and cash reserves.

Small firms engage more in risk management than large firms.

Answer 1

Option A is correct

Not all risks are completely eradicated but can be mitigated to some extent by taking appropriate strategies.

Firms regularly use derivatives as a risk mitigation which affects the operational well beging like hedging the raw materials, foreign receivables.

Firms also use hedging for raw materials, forex, foreign receivables etc.,

No, large firms does more risk management strategies because of better knowledge, excellent manpower, money to take better hedging strategies.