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REGULATORS SHOULD NOT PROHIBIT EXECUTIVES FROM HEDFING THEIR
COMPANY'S STOCK. eXPLAIN THE ARGUEMENT FOR THIS POSITION
Solution
Heding is a mechanism to lower the risk due to price fluctuation. An example of hedging would
be if you own a company's stock then sold a futures contract which allow you to sell your stock
at set price.
In a volatile situation where price fluctuates more frequently hedging by executive diversifies
portfolio, limits losses and rases cash. It must be disclosed to provide transparency to other
shareholders. It is like a signal to shareholders what top most employees of the company thinks
about the growth.

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REGULATORS SHOULD NOT PROHIBIT EXECUTIVES FROM HEDFING THEIR COMPANY.pdf

  • 1. REGULATORS SHOULD NOT PROHIBIT EXECUTIVES FROM HEDFING THEIR COMPANY'S STOCK. eXPLAIN THE ARGUEMENT FOR THIS POSITION Solution Heding is a mechanism to lower the risk due to price fluctuation. An example of hedging would be if you own a company's stock then sold a futures contract which allow you to sell your stock at set price. In a volatile situation where price fluctuates more frequently hedging by executive diversifies portfolio, limits losses and rases cash. It must be disclosed to provide transparency to other shareholders. It is like a signal to shareholders what top most employees of the company thinks about the growth.