Question

what are the two primary reasons to hedge?

Answer 1

The two primary reasons to Hedge are to prevent potential loss and to gain more income.

Hedging is a term used in investment economics and it involves using financial instruments available in the market to balance or offset risk of any potential loss or even gains. Generally, it is a method of covering expected losses of one investment, by putting money in other investments.

Hedging is a method of managing risk (risk management technique) by investing in stocks, insurance, contracts and other funds.

Answer 2

The two primary reasons to hedge are portfolio management and risk avoidance.

Explanation:

• Hedging is a risk management strategy that stops the losses involved in the investment.  

• A hedge is made up of financial instruments such s stocks, funds, and insurance and includes swaps, options, and contracts. Many other types of OTC markets etc.  

• The types of hedging include money market for currencies, currency future contracts, forwards exchange contracts for currencies.

• The firm can minimize its risks this depends on the forms of risk tolerance. Hedging is a way to portfolio protection.

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• brainly.in/question/5182892 answered by writersparadise.