Hedging with options removes both upside and downside, Financial Management

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Hedging with options removes both upside and downside

True and False

1) Hedging with options removes both upside and downside performance potentials.

2) Options are used to insure an existing portfolio. For example, buying a put on an asset (or portfolio) reduces the risk of loss in case of a drop in value of the asset.

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Financial Management: Hedging with options removes both upside and downside

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Financial Management: Hedging with options removes both upside and downside

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