QUESTION 12 What is the purpose of hedging? To increase risk exposure To protect against potential losses To maximize profits without consideration of risk To speculate on price movements QUESTION 13 What is a defined benefit plan based on? Individual contributions Market performala based on salary and years of service Employee stock options

Hedging is like putting on a safety net in the financial circus! Its main purpose is to protect against potential losses from unpredictable market movements. Imagine you’re a farmer; you'd want to lock in prices for your crops to shield yourself against bad weather or fluctuating prices. This way, no matter what happens, you'll have a fallback. A defined benefit plan is essentially a structured promise from an employer to their employees. It's based on an employee's salary and years of service, serving as a reliable source of retirement income. This plan guarantees a specific payout upon retirement, making it a comfort for workers as they plan their golden years. Think of it as a loyal friend that ensures you never go broke as you enjoy those blissful retirement days!