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How Does Hedging Affect the Flow of Funds in the Financial

Question 104

Multiple Choice

How does hedging affect the flow of funds in the financial system?


A) It reduces it since it is a sign that investors do not like risk.
B) It reduces it because it increases risk by encouraging speculation.
C) It increases it because it reduces risk thus encouraging more people to make financial investments.
D) It increases it by encouraging more speculation.

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