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A farmer is worried about wheat prices falling at harvest time and not covering his costs. On the other hand, a baker is worried about

A farmer is worried about wheat prices falling at harvest time and not covering his costs. On the other hand, a baker is worried about prices rising at harvest time and leading to higher costs for him. Therefore they set a price beforehand to reduce their risks. This is an example of _____. diversification hedging the risk-reward trade-off risk spreading

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