What does the work hedge mean in the business sector?

[Dollyo]

Business English Lesson, Advanced Level

ESL/EFL Test #440 "Optimal Hedging", question 1

The optimal hedge consists of a position in a single ......... whose strike price is independent of the level of expense the institution is willing to incur for its hedging program.

(a) industry
(b) market
(c) option
(d) share

Business English Lesson, Advanced Level

ESL/EFL Test #440 "Optimal Hedging", answer 1

The optimal hedge consists of a position in a single option whose strike price is independent of the level of expense the institution is willing to incur for its hedging program.

Correct answer: (c) option
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What does the work hedge mean in the business sector?

Dollyo

[Mister Micawber]

.
Hedging = an act or means of preventing complete loss of an investment with a partially counterbalancing one.
.
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Native English teacher at Mister Micawber's