Question

Hedging can be viewed as a form of speculation, inasmuch as it involves taking a position that something bad will happen.​

True or False

Answer 1

above statment is completely false hedging is not a form of speculation infact it is used to minimise risk and offset losses.

what does hedgin mean?

A hedge is an investment that protects your finances from a risky situation. Hedging is done to minimize or offset the chance that your assets will lose value. It also limits your loss to a known amount if the asset does lose value.

For example, if you buy homeowner's insurance, you are hedging yourself against fires, break-ins, or other unforeseen disasters

although hedging also comes at a cost therefore it minimises profits also