Which One of the Following Statements Regarding Hedging Is True

Multiple Choice

Which one of the following statements regarding hedging is true?

A) Hedging is adding securities to an existing portfolio to increase the overall return.
B) Hedging is a strategy used by investors to increase both the risk and return of a portfolio.
C) Hedging is a strategy used by investors to reduce the risk of a portfolio.
D) Hedging is a strategy used to increase portfolio volatility.
E) None of these is true.