Week 5 Discussion Question 1
Determine two to three (2-3) methods of using stocks and options to create a risk-free hedge portfolio can be created. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.
Hedging is a transaction that lowers a firm’s risk of damage due to fluctuating commodity prices, interest rates, and exchange rates (Brigham, 2014). Hedging, whether in your portfolio, your business or anywhere else is about decreasing or transferring risk. It is a valid strategy that can help