Which of the following is an example of hedging?
A.
Kodak uses silver to make film. They...
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Which of the following is an example of hedging?
A.
Kodak uses silver to make film. They "lock in" the price ofsilver so that they know what their costs will be goingforward.
B.
Delta airlines biggest cost is jet fuel. They "lock in" theprice of oil so that their fuels costs will not increase.
C.
Marathon Oil does a great deal of business with Saudi Arabia.The U.S. dollar is worth 3.75 riyals (the currency in SaudiArabia). If this rate fluctuates it can make a big difference toMarathon's profits. Marathon "locks in" this exchange rate.
D.
All three of the above scenarios are examples of hedging.
Answer & Explanation
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D All three of the above scenarios are examples of hedging Hedging is a method of reducing the risk that a company is exposed to during the normal course of doing business Companies want to reduce this risk and
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