Hedge/Hedging
Strategy reducing financial risk.
Real World
When Brexit uncertainty caused the pound to fall sharply in 2016, Airbus had locked in forward contracts to sell euros at pre-agreed rates, protecting its sterling revenue from exchange rate volatility.
Exam Focus
Explain hedging by linking it to a specific risk (e.g. exchange rate), the instrument used (e.g. forward contract), and the certainty it provides.
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