Which of the following is correct about lsquo hedging rsquo 1 Hedging is done for mak...........

Economic Affairs Financial Markets

Which of the following is correct about ‘hedging’?

1. Hedging is done for making speculative profits only.

2. It may be done in commodity, security and currency by forward sales or purchases

3. All Alternative Investment Funds (AIFs) whether operating as Private Equity Funds, Real Estate Funds, Hedge Funds, etc. must register with SEBI under the AIF Regulation Act 2012

Select the correct answer using the Codes given below

Only 1

1 and 2

Only 3

2 and 3

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Explanation:

1st statement is incorrect.
A hedge is an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.