If Hedging Currency Risk Is to Add Value to the Stakeholders

question 26

True/False

If hedging currency risk is to add value to the stakeholders of the firm, then hedging must impact either expected future cash flows or the cost of capital or both.

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Definitions:

Disaffirm

The legal act of renouncing or voiding a contract or agreement, particularly as it relates to individuals who were not competent to enter into the contract initially, like minors.

Unconscionable Contracts

Agreements between parties that are so unfair or one-sided that they shock the conscience, often rendering them unenforceable in court.

Transfer Of Assets

The act of moving ownership of assets from one party to another, which could involve property, financial instruments, or other resources.

In Pari Delicto

In equal fault. A contract relationship when both parties to an illegal agreement are equally wrong, in the knowledge of the operation and effect of their contract.