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CIPS L5M2 Exam - Topic 4 Question 60 Discussion

A financial instrument used by airlines to fix the price of fuel over a period of time is known commonly as a what?
B) swap
A) commodity
C) exchange
D) hedge

CIPS L5M2 Exam - Topic 4 Question 60 Discussion

Actual exam question for CIPS's L5M2 exam
Question #: 60
Topic #: 4
[All L5M2 Questions]

A financial instrument used by airlines to fix the price of fuel over a period of time is known commonly as a what?

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Suggested Answer: B

This is a 'swap' and is explained on p.94. This is a type of 'hedging' but there is no such thing as 'a hedge'. For a more in-depth look at Swaps see: https://www.mercatusenergy.com/blog/bid/77634/an-introduction-to-airline-fuel-hedging-strategies-swaps


by Leonora at Jul 31, 2025, 07:36 AM

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Gaynell
7 months ago
Surprised people don't know this one!
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Jenelle
7 months ago
Wait, isn't it just a contract?
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Monroe
7 months ago
I thought it was a commodity.
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Paola
7 months ago
Definitely a hedge, right?
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Brandee
8 months ago
It's called a swap!
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Anthony
8 months ago
I’m leaning towards "hedge" since it relates to risk management, but I could be mixing it up with other terms we studied.
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Lashawn
8 months ago
I feel like "commodity" could be a possibility too, but it seems too broad for this specific context.
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Alease
8 months ago
I remember practicing a question about hedging fuel costs, but I can't recall if that's the right term here.
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Leonida
9 months ago
I think it might be a swap, but I'm not entirely sure. We covered this in class, and it was a bit confusing.
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Izetta
9 months ago
Ugh, I'm drawing a blank on this one. I know it has something to do with airlines and fuel prices, but I can't recall the exact terminology. I'll have to make an educated guess and go with "commodity" since that sounds related to the fuel market.
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Zoila
9 months ago
Okay, let me see... I remember learning about this in class. I believe the term is a "swap" where the airline locks in a fixed fuel price over a period of time. I'm pretty confident that's the right answer.
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Lynda
9 months ago
Hmm, I'm not totally sure about this one. I know airlines use some kind of financial instrument to manage fuel costs, but I can't remember the specific term for it. I'll have to think this through carefully.
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Jacquelyne
9 months ago
This one seems pretty straightforward. I think the answer is a "hedge" since airlines use financial instruments to fix the price of fuel over time.
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Shalon
10 months ago
I'm not sure, but I think it could also be B) swap.
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Theodora
11 months ago
I agree with Albina, hedging makes sense for airlines to manage fuel costs.
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Albina
11 months ago
I think the answer is D) hedge.
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Eric
11 months ago
I'm pretty sure it's D) hedge. Airlines use fuel hedges to manage their fuel costs and budget more effectively.
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Tegan
10 months ago
I think you're right, airlines use fuel hedges to protect themselves from price fluctuations.
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