What is hedging? (a) Reduce to foreign exchange loss (b) reduce the operational risk

hedge is a strategy used to protect an investment against  loss.

 

Both (a) Reduce to foreign exchange loss and to (b) reduce the operational risk.

Correct Answer is b) Reduce the operational risk

Hedging is used for both A and B.

Hedging is used to reduce foreign exchange loss.

Hedging can be used to reduce any kind of exchange risk not only currency, e.g future price increase/decrease of any comodity.

(b) reduce the operational risk

it effect only on currency exchange risks

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this means reducing the optional risk.

a) Reduce to foreign exchange loss