What investment strategy can reduce an investor's risk on an investment?
Answer: (a), Hedging
"Hedging" is the investment strategy of using hedges to mitigate the risk of adverse price movement on an investment. The hedge investment typically offsets the investment being hedged against, and may include a futures contract or short position on a stock the investor holds. Hedging can provide investors with protection against adverse price movements of the initial investment, but hedging can be costly and entails other risks.
